OFFER TO PURCHASE FOR CASH
UP TO 4,225,000 SHARES OF COMMON STOCK
of
RANGER INDUSTRIES, INC.
at
$2.00 Per Share in Cash
by
BUMGARNER ENTERPRISES, INC.
--------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON JANUARY 30, 2001, UNLESS THE
OFFER IS EXTENDED.
--------------------------------------------------------------------------------
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Bumgarner Enterprises, Inc. ("Bumgarner") hereby offers to purchase for
cash from the shareholders of Ranger Industries, Inc. ("Ranger") shares of
common stock, par value $.01 per share, of Ranger, at $2.00 per share, net to
the seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the accompanying Letter of
Transmittal (which, as amended or supplemented from time to time, together,
constitute the "Offer Documents").
Bumgarner will, upon the terms and subject to the conditions of the tender
offer, including the proration provisions, accept for payment, and thereby
purchase, up to 4,225,000 shares of Ranger common stock validly tendered and not
withdrawn, representing a total purchase of up to 4,225,000 (approximately 80%)
of the outstanding shares of Ranger common stock on December 27, 2000, pursuant
to the tender offer. All shares acquired in the tender offer will be acquired at
the Offer Price. In the event that more than 4,225,000 shares of the outstanding
shares of Ranger common stock are validly tendered and not withdrawn, Bumgarner
will accept for payment, and thereby purchase, shares of Ranger common stock on
a pro rata basis (adjusted downward to avoid acceptance for payment of
fractional shares) upon the terms and subject to the conditions of the tender
offer. See The Tender Offer - Terms of the Tender Offer, below. Shares of Ranger
common stock not purchased because of proration will be returned to the
tendering shareholder at Bumgarner's expense.
The tender offer is not conditioned on any minimum number of shares of
Ranger common stock being tendered. The tender offer is, however, subject to
certain other conditions set forth in the Offer Documents. See The Tender Offer
- Terms of the Tender Offer, below.
-------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the transaction, passed upon the
merits or fairness of the transaction, or passed upon the adequacy or accuracy
of the disclosure in this document. Any representation to the contrary is a
criminal offense.
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<PAGE>
The shares are not listed on any securities exchange or authorized to be
quoted on Nasdaq or in any other inter-dealer quotation system of a registered
national securities association. As of December 27, 2000, the latest date
Bumgarner could obtain sale information before the date of the public
announcement of the tender offer, the last sale price of the shares in the
"over-the-counter" market reported to the National Association of Securities
Dealers, Inc. was $1.75 on December 27, 2000.
The date of this Offer to Purchase is December 29, 2000.
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<PAGE>
IMPORTANT
Any shareholder who wants to tender all or any portion of such
shareholder's shares of Ranger common stock should either (1) complete and sign
the accompanying Letter of Transmittal (or a facsimile thereof) in accordance
with the instructions in the Letter of Transmittal, have such shareholder's
signature thereon guaranteed if required by Instruction 1 to the Letter of
Transmittal, mail or deliver the Letter of Transmittal (or a facsimile thereof),
and any other required documents to our depositary, Continental Stock Transfer &
Trust Company (the "Depositary") and either deliver the certificates for such
shares to the Depositary or tender such shares pursuant to the procedures for
book-entry transfer set forth herein, or (2) request such shareholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. Any shareholder whose shares of Ranger common
stock are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee to tender such shares.
A shareholder who wants to tender shares and whose certificates
representing such shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of the
tender offer, may tender such shares by following the procedures for guaranteed
delivery set forth in The Tender Offer - Procedure for Tendering Shares, below.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to Beacon Hill Partners, Inc. at
(800) 755-5001 (toll free). A shareholder also may contact brokers, dealers,
commercial banks or trust companies for assistance concerning the tender offer.
Because Bumgarner wants to provide you with more meaningful and useful
information, this Offer to Purchase contains certain "forward-looking
statements" (as such term is defined in Section 21E of the Securities Exchange
Act of 1934, as amended). These statements reflect Bumgarner's current
expectations regarding its possible future results of operations, performance,
and achievements. These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Wherever possible, Bumgarner has tried to identify these forward-looking
statements by using words such as "anticipate," "believe," "estimate," "expect,"
"plan," "intend," and similar expressions. These statements reflect Bumgarner's
current beliefs and are based on information currently available to Bumgarner.
Accordingly, these statements are subject to certain risks, uncertainties, and
contingencies, which could cause Bumgarner's actual results, performance, or
achievements to differ materially from those expressed in, or implied by, such
statements. These risks, uncertainties and contingencies include, without
limitation, the factors set forth herein under "Factors That May Affect Future
Operating Results." Bumgarner has no obligation to update or revise any such
forward-looking statements that may be made to reflect events or circumstances
after the date of this Offer to Purchase.
A Summary of the Tender Offer section describing the principal terms of
the tender offer appears on pages 1 through 3. You should read this entire
document carefully before deciding whether to tender your shares.
iii
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF THE TENDER OFFER..................................................1
INTRODUCTION.................................................................4
SPECIAL FACTORS..............................................................5
1. BACKGROUND OF THE TENDER OFFER.........................................5
2. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE TENDER OFFER AND
MERGER.................................................................7
3. PLANS FOR RANGER; OTHER MATTERS........................................8
4. INTERESTS OF CERTAIN PERSONS IN THE TENDER OFFER AND THE MERGER........9
THE TENDER OFFER............................................................10
1. TERMS OF THE TENDER OFFER.............................................10
2. ACCEPTANCE FOR PAYMENT AND PAYMENT....................................12
3. PROCEDURE FOR TENDERING SHARES........................................13
4. WITHDRAWAL RIGHTS.....................................................16
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES...............................16
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES....................18
7. POSSIBLE EFFECTS OF THE TENDER OFFER ON THE MARKET FOR THE RANGER
SHARES; SECURITIES EXCHANGE ACT REGISTRATION..........................19
8. CERTAIN INFORMATION CONCERNING RANGER.................................20
9. CERTAIN INFORMATION CONCERNING BUMGARNER..............................24
10. THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS.....................38
11. SOURCE AND AMOUNT OF FUNDS............................................39
12. CONDITIONS TO THE TENDER OFFER........................................39
13. CERTAIN LEGAL MATTERS.................................................40
14. FEES AND EXPENSES.....................................................41
15. MISCELLANEOUS.........................................................42
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<PAGE>
SUMMARY OF THE TENDER OFFER
Bumgarner Enterprises, Inc. is offering to purchase up to 4,225,000 shares
of common stock of Ranger Industries, Inc., representing a total purchase of up
to approximately 80% of the outstanding shares of Ranger common stock as of
December 27, 2000, for $2.00 per share in cash. The following are some of the
questions you, as a shareholder of Ranger, may have regarding the tender offer,
and answers to those questions. We urge you to carefully read the remainder of
this document and the accompanying Letter of Transmittal because they contain
additional important information not contained in this summary.
Who is offering to buy my securities?
Our name is Bumgarner Enterprises, Inc. and when this offer mentions
"Bumgarner" it refers to us. We are a Florida corporation. See The Tender Offer
- Certain Information Concerning Bumgarner, below.
What are the classes and amounts of securities sought in the tender offer?
Pursuant to the obligations imposed in an Agreement and Plan of Merger and
Reorganization, dated as of December 29, 2000, by and among Bumgarner, Ranger,
and BEI Acquisition Corporation, a wholly owned subsidiary of Ranger, we are
seeking to purchase up to 4,225,000 shares of common stock of Ranger,
representing a total purchase of up to approximately 80% of the outstanding
shares of Ranger common stock as of December 27, 2000. See The Tender Offer -
Terms of the Tender Offer, below.
How much is Bumgarner offering to pay for my securities and what is the form of
payment?
We are offering to pay $2.00 per share in cash, less any required
withholding taxes, and without the payment of interest. If you own your shares
through a broker or other nominee, and your broker tenders your shares on your
behalf, your broker or nominee may charge you a fee for doing so. You should
consult your broker or nominee to determine whether any charges will apply. We
will not be obligated to pay for or reimburse you for such broker or nominee
charges. See Introduction, below. In addition, if you do not complete and sign
the Substitute Form W-9 included in the Letter of Transmittal, you may be
subject to required backup Federal income tax withholding. See Instruction 10 to
the Letter of Transmittal. See The Tender Offer - Acceptance for Payment and
Payment, below.
Has Ranger approved the tender offer?
Ranger's board of directors has approved the tender offer. However,
Ranger's board of directors is not making any recommendation to you as to
whether you should tender or refrain from tendering your shares. You must make
your own decision as to whether to tender your shares and, if so, how many
shares to tender. The tender offer is being made to all Ranger shareholders,
including shareholders who are directors, officers or beneficial owners of more
than five percent of Ranger common stock. Certain of Ranger's directors and
executive officers, as well as certain beneficial owners of more than five
percent of Ranger common stock, have agreed to tender shares in the tender
offer. Some of Ranger's directors have interests in the tender offer which are
in addition to those of other Ranger shareholders. See Special Factors -
Interest of Certain Persons in the Tender Offer and the Merger, below.
<PAGE>
How will Bumgarner pay for the shares?
Although we do not have financing in place yet to pay for the shares
tendered in the tender offer, we are currently seeking to obtain a loan which
will provide us with the funds necessary to complete the tender offer. See The
Tender Offer - Source and Amount of Funds, below.
What are the conditions to Bumgarner completing the tender offer?
We are not required to complete the tender offer unless:
o a merger pursuant to an Agreement and Plan of Merger and
Reorganization, dated as of December 29, 2000, by and among Bumgarner,
Ranger, and BEI Acquisition Corporation, a wholly owned subsidiary of
Ranger, is consummated simultaneously with the completion of the tender
offer;
o our ability to obtain financing to complete the tender offer; and
o certain other conditions. See The Tender Offer - Conditions of the
Tender Offer, below.
How long do I have to decide whether to tender in the tender offer?
You will have at least until 5:00 p.m., New York City time, on January 30,
2001 to decide whether you would like to tender your shares in the tender offer.
If you cannot deliver everything that is required to make a valid tender by that
time, you may be able to use a guaranteed delivery procedure, which is described
in the Offer Documents. See The Tender Offer - Procedure for Tendering Shares,
below.
Can the tender offer be extended and under what circumstances?
We have the right to extend the tender offer if the conditions to the
tender offer are not met by January 30, 2001. If we extend the tender offer
because conditions were not met, we may not accept or pay for any shares until
the tender offer, as extended, expires. If there is an extension, we will make a
public announcement by 9:00 a.m., New York City time, on the next business day
after the last scheduled or announced expiration date. See The Tender Offer -
Acceptance for Payment and Payment, below.
How do I tender my shares?
To tender your shares, the following must occur prior to 5:00 p.m., New
York City time, on January 30, 2001, unless the tender offer is extended:
o If you are a record holder (that is, if a stock certificate has been
issued to you), you must either complete and sign the accompanying
Letter of Transmittal (or facsimile thereof) and send it with your
stock certificate to the depositary for the tender offer or follow the
procedures described in the Offer Documents for book-entry transfer.
These materials must reach the depositary before the tender offer
expires. Detailed instructions are contained in the Letter of
Transmittal and in The Tender Offer - Procedure for Tendering Shares,
below.
o If you are a record holder, but your stock certificate is not available
or you cannot deliver it to the depositary before the tender offer
expires, you may be able to tender your shares using the enclosed
Notice of Guaranteed Delivery, described in The Tender Offer -
Procedure for
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<PAGE>
Tendering Shares, below, of this document. Please call Beacon Hill
Partners, Inc., our information agent, at (212) 843-8500 or (800)
755-5001 for assistance.
o If you hold your shares through a broker or bank, you should contact
your broker or bank and give instructions that your shares be tendered.
When will I get paid if I tender my shares?
If all of the conditions of the tender offer are satisfied or waived and
your shares of Ranger common stock are accepted for payment, we will pay you for
your shares promptly after the expiration of the tender offer. See The Tender
Offer - Acceptance for Payment and Payment, below.
What are my withdrawal rights?
If, after tendering your shares in the tender offer, you decide that you
do NOT want to accept the tender offer, you can withdraw your shares by so
instructing the depositary for the tender offer before the tender offer expires.
If you tendered by giving instructions to a broker or bank, you must instruct
the broker or bank to arrange for the withdrawal of your shares. See The Tender
Offer - Withdrawal Rights, below.
What are my appraisal rights?
No appraisal rights are available in connection with the tender offer.
What is the market value of my shares as of a recent date?
As of December 27, 2000, the latest date we could obtain sale information
before the public announcement of the tender offer, the last sale price of
shares of Ranger common stock in the "over-the-counter" market reported to the
National Association of Securities Dealers was $1.75 on December 27, 2000.
What happens if I tender my shares and Bumgarner does not accept the tendered
shares?
If any shares of common stock of Ranger that you tender are not accepted
for any reason, certificates representing such shares will be returned to you,
or to the person you specify in your tendering documents. See The Tender Offer -
Acceptance for Payment and Payment, below.
How can I get further information?
You can call Beacon Hill Partners, Inc. at (800) 755-5001 (toll free).
Beacon Hill Partners, Inc. is acting as the Information Agent for our tender
offer.
3
<PAGE>
INTRODUCTION
Bumgarner Enterprises, Inc. ("Bumgarner"), a Florida corporation, hereby
offers to purchase (the "Tender Offer") up to 4,225,000 shares of outstanding
common stock, par value $.01 per share, of Ranger Industries, Inc., a
Connecticut corporation ("Ranger"), representing a total purchase of up to
approximately 80% of the outstanding shares of Ranger common stock as of
December 27, 2000, at a price of $2.00 per share (the "Offer Price"), net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in this offer to purchase and in the accompanying letter of
transmittal (which, as amended or supplemented from time to time, together,
constitute the "Offer Documents").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the sale of shares of Ranger common stock
pursuant to the Tender Offer, unless their brokers impose a charge for tendering
the shares owned by such shareholder. Bumgarner will pay all fees and reasonable
out-of-pocket expenses of Continental Stock Transfer & Trust Company, which is
acting as the depositary (the "Depositary") and Beacon Hill Partners, Inc.,
which is acting as the Information Agent (the "Information Agent"), incurred in
connection with the Tender Offer. See The Tender Offer - Fees and Expenses,
below.
The purpose of the Tender Offer in conjunction with the Merger (as defined
herein) is to enable Bumgarner to acquire control of Ranger and to combine the
businesses of Ranger and Bumgarner while permitting Bumgarner to satisfy its
contractual obligations under the Merger Agreement and while also providing
Bumgarner with access to a sufficient amount of Ranger's cash to use to develop
its business while at the same time allowing Ranger shareholders to participate
in the development of that business or to provide them with the opportunity to
obtain liquidity for all or a substantial portion of their holdings of Ranger
common stock. Pursuant to an Agreement and Plan of Merger and Reorganization
(the "Merger Agreement"), dated as of December 29, 2000, by and among Bumgarner,
Ranger, and BEI Acquisition Corporation, a wholly owned subsidiary of Ranger,
and the Florida Business Corporation Act, simultaneously with the completion of
the Tender Offer, BEI Acquisition Corporation, a wholly owned subsidiary of
Ranger, will be merged with and into Bumgarner (the "Merger"), the separate
existence of BEI Acquisition Corporation will cease and Bumgarner will continue
as the surviving corporation in the Merger. The simultaneous completion of the
Merger with the consummation of the Tender Offer is a condition to the Tender
Offer. At the effective time of the Merger, each share of common stock, par
value $.001 per share, of Bumgarner, then outstanding will be converted into the
right to receive one share of Ranger common stock, unless otherwise adjusted as
provided for herein, without interest. The Merger Agreement is more fully
described in The Tender Offer - The Merger Agreement and Certain Other
Agreements, below.
Ranger has informed Bumgarner that, as of December 27, 2000, there were
5,278,644 shares of Ranger common stock issued and outstanding.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND YOU SHOULD READ THEM IN THEIR ENTIRETY BEFORE YOU MAKE
A DECISION WITH RESPECT TO THE TENDER OFFER.
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SPECIAL FACTORS
1. BACKGROUND OF THE TENDER OFFER
Ranger was organized in 1961, as the successor to the Connecticut Leather
Company, which was founded in 1932. From 1961 through 1990, Ranger was known as
"Coleco Industries, Inc."
In 1988, Ranger, then known as Coleco Industries, Inc., filed a voluntary
petition in bankruptcy. In 1990, a plan of reorganization (the "Plan") was
approved by the bankruptcy court and became effective, and Ranger emerged from
Chapter 11 with $950,000 in cash and no liabilities. Under the Plan, $5.5
million was transferred to a product liability trust (the "Product Liability
Trust"), to process and liquidate product liability claims pending or arising
after May 15, 1990.
In May 2000, the bankruptcy court authorized the trustee of the Product
Liability Trust to obtain insurance covering claims made against the Product
Liability Trust, and after paying $1.2 million for the insurance premiums, to
make a distribution to Ranger of substantially all of the remaining funds in the
Product Liability Trust. The amount of the distribution to Ranger, which was
made in May 2000, was approximately $11 million.
Ranger's financial resources at the present time, other than its cash on
hand, are the possible utility of net operating loss carryforwards ("NOLs") of
approximately $178.4 million as of September 30, 2000. The NOLs resulted
primarily from operating losses sustained by Ranger prior to 1990 and have
sheltered Ranger's modest interest income and the income of the Product
Liability Trust from Federal income taxation and, until 1999, from state income
taxation. The income of the Product Liability Trust, if any, continues to be
taxable to Ranger. As more fully discussed in The Tender Offer - Certain
Information Concerning Ranger - Use of NOLs, below, the continuing availability
of the NOLs is uncertain.
The shares are not listed on any securities exchange or authorized to be
quoted on Nasdaq or in any other inter-dealer quotation system of a registered
national securities association. The shares are traded only on a limited basis
in the "over-the-counter" market. As of December 27, 2000, the latest date
Bumgarner could obtain sale information before the date of the public
announcement of the Tender Offer, the last reported sale price of the shares in
the "over-the-counter" market reported to the National Association of Securities
Dealers, Inc. (the "NASD") was $1.75 on December 27, 2000.
In late spring of 2000, Ranger began exploring various options available
to Ranger to enhance shareholder value, including liquidating Ranger, selling
Ranger and selling various Ranger assets.
In June 2000, Ranger's chief executive officer, Morton E. Handel, met with
Ranger's accountants, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") to
discuss the possibility of liquidating Ranger. PricewaterhouseCoopers examined
the issue and shared its conclusions with Ranger. Ranger's management concluded
after reviewing the matter with PricewaterhouseCoopers and with its legal
advisers that liquidating Ranger was not the most efficient manner in which to
distribute the value of Ranger to its shareholders. Management was advised that
a liquidation of Ranger could take years to resolve since Ranger would have to
make certain filings with certain governmental agencies and wait to receive
clearance from such agencies in order to effectuate the dissolution - a process
which the Ranger management was informed could take years. The Ranger management
was also advised that reserves for such period of time would have to be set
aside for any potential claims by creditors.
5
<PAGE>
On August 3, 2000, Ranger placed the following advertisement in the
eastern edition of The Wall Street Journal:
For Sale
Clean Public Shell
$ 10 million cash position
No liability
Large pre-1990 NOL
FAX INFO REQUESTS TO:
860-726-9011
Ranger received numerous inquiries with respect to its advertisement in
The Wall Street Journal, including the following on August 3, 2000 from Charles
G. Masters, the president of, and holder of the majority interest in, Bumgarner:
"We are quite interested in the subject of your advertisement. We
are interested in the project as either a cash purchase of control
or as a reverse merger candidate. We are prepared to move promptly."
Bumgarner, through its principal shareholder and sole director and
executive officer, Charles G. Masters, has been for some time seeking a suitable
publicly held corporation to combine with Bumgarner and complete certain
business transactions Mr. Masters contemplated. When Mr. Masters saw that Ranger
management was attempting to sell a "clean public shell" with $ 10 million in
cash, Mr. Masters believed that Ranger was a good vehicle for his plans. This
was also about the time that Mr. Masters began negotiating with Inter-Oil & Gas
Group to purchase an interest in certain oil and gas properties or the Henryetta
Joint Venture.
On August 7, 2000, Ranger's chief executive officer, Mr. Handel, contacted
Mr. Masters to discuss Mr. Masters' proposal. Ranger's management explored
various alternatives with Mr. Masters which would enhance shareholder value
while at the same time permit Mr. Masters to gain a controlling interest in
Ranger.
One of the proposals suggested by Mr. Masters was the direct purchase by
him or one of his affiliates of the shares of Ranger common stock held, directly
or indirectly, by all of the directors and officers of Ranger, representing an
aggregate interest of 35.1% of the outstanding common stock of Ranger as of
February 22, 2000. The management of Ranger declined to accept such proposal
and, instead, proposed that Mr. Masters launch a tender offer open to all of the
Ranger shareholders for all of the outstanding Ranger common stock. The
management of Ranger rejected the proposal by Mr. Masters to purchase the shares
of Ranger common stock held by all of the directors and officers of Ranger
because it would not have permitted the other Ranger shareholders to participate
in the sale. The Ranger management believed that it was important to share
whatever control premium was included in the offer price with the other
shareholders and that the ability itself to sell was an important benefit that
should be shared with all Ranger shareholders because of the thin and illiquid
market for the Ranger common stock. Mr. Masters agreed to launch a tender offer
for up to 4,225,000 shares of the outstanding Ranger common stock. In connection
with the tender offer, Ranger and Mr. Masters discussed the purchase by Mr.
Masters and his affiliates of 14,720,000 newly issued shares of Ranger common
stock at $1.88 per share in exchange for all of the outstanding shares of stock
of Bumgarner, resulting in Bumgarner becoming a subsidiary of Ranger.
In the process of the negotiations, Ranger's management imposed a
condition that Bumgarner make an offer to purchase up to 4,225,000 shares of
Ranger common stock at $2.00 per share pursuant to
6
<PAGE>
this Tender Offer. Although Bumgarner desired to conserve Ranger's cash for use
in potentially profitable business operations, Ranger's management made it clear
that the transaction could only proceed if the tender offer were completed.
Bumgarner made it clear to Ranger that Bumgarner could only complete the tender
offer with financing provided by Ranger. Based on those understandings,
Bumgarner and Ranger agreed to proceed with the Merger and this Tender Offer as
contemplated in this Tender Offer statement.
During the course of the negotiations with Mr. Masters, Ranger's
management continued to evaluate the other indications of interest received by
Ranger as a result of its advertisement. Of the handful of proposals which
management deemed to be for valid business purposes, Ranger's management found
Mr. Masters' proposals to be the most promising in potentially enhancing
shareholder value. While many of the proposals received from other parties would
have resulted in Ranger shareholders receiving nominal cash distributions, the
alternative with Mr. Masters would afford the Ranger shareholders the option to
tender their shares for cash in the Tender Offer and those who would continue to
remain Ranger shareholders would benefit from the Bumgarner business since
Bumgarner, after the purchase of the 14,720,000 newly issued shares of Ranger
common stock, would become a subsidiary of Ranger. The Ranger management
believed the Bumgarner business might have business potential in generating
value for the Ranger shareholders. See The Tender Offer - The Merger Agreement
and Certain Other Agreements, below.
Ranger and Mr. Masters agreed for tax reasons that rather than having Mr.
Masters and his affiliates purchase the 14,720,000 newly issued shares of Ranger
common stock that Ranger would enter into a merger agreement with Bumgarner and
BEI Acquisition Corporation, a newly formed wholly owned subsidiary of Ranger,
whereby Bumgarner would be merged into BEI Acquisition Corporation and Bumgarner
would become the surviving corporation in exchange for the issuance of
14,720,000 newly issued shares of Ranger common stock to the shareholders of
Bumgarner. See The Tender Offer - The Merger Agreement and Certain Other
Agreements, below.
On December 28, 2000, the board of directors of Ranger approved the Merger
Agreement and the transactions contemplated thereunder, including the Tender
Offer.
2. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE TENDER OFFER AND MERGER
Purposes. The purpose of the Tender Offer and the Merger is to enable
Bumgarner to acquire control of Ranger and to combine the businesses of Ranger
and Bumgarner while permitting Bumgarner to satisfy its contractual obligations
under the Merger Agreement and while also providing Bumgarner with access to a
sufficient amount of Ranger's cash to use to develop its business while at the
same time allowing Ranger shareholders to participate in the development of that
business or to provide them with the opportunity to obtain liquidity for all or
a substantial portion of their holdings of Ranger common stock.
Alternatives. Before accepting Mr. Masters proposal, Ranger's management
considered various alternatives to his proposal, including those described above
under Special Factors - Background of the Tender Offer. It also considered a
liquidation of Ranger by a sale of its assets and a distribution of the net
after-tax proceeds. Ranger determined not to give such alternatives serious
consideration because of the length of time, transaction costs, regulatory risks
and uncertainty involved.
Reasons. Bumgarner believes that there is not currently an orderly or
viable market for Ranger common stock and, as a result, Ranger common stock is
undervalued in the "over-the-counter" market. Upon the consummation of the
Merger, the Ranger shareholders will be able to derive the benefits, if any,
7
<PAGE>
of the business of Bumgarner. In addition, Ranger shareholders have the option
to receive cash in consideration for shares tendered in the Tender Offer.
Effects. As a result of the Tender Offer and the Merger, substantially all
of the equity interest in Ranger will be directly owned by Mr. Masters and his
affiliates. Shareholders of Ranger who sell their shares of Ranger common stock
in the Tender Offer will cease to have any equity interest in Ranger and any
right to participate in its earnings and any future growth. If the Merger is
consummated, non-tendering shareholders will hold an equity interest in Ranger
which will be significantly diluted by the shares issued to the Bumgarner
shareholders. See The Merger Agreement and Certain Other Considerations, below.
Since the shares purchased in the Tender Offer will be owned by Bumgarner, the
Tender Offer will reduce Ranger's "public float" (the number of shares owned by
non-affiliate shareholders and available for trading in the "over-the-counter"
securities market). This reduction in Ranger's public float, combined with
higher leverage, may result in lower stock prices or reduced liquidity in the
trading market for its common stock following the completion of the Tender
Offer.
Benefits. Bumgarner believes that the Tender Offer may provide several
benefits to Ranger and its shareholders, including:
o Shareholders who accept the Tender Offer will sell their shares of
Ranger common stock for cash at a price representing a premium of
approximately 14% over the last reported sale price of the Ranger
common stock in the "over-the-counter" market on December 27, 2000, the
latest date Bumgarner could obtain sale information prior to the public
announcement of the Tender Offer. The Offer Price is also $.15 above
the estimated liquidation price per share of Ranger common stock based
upon its current assets of $10.2 million and anticipated liquidation
expenses of $400,000. This will provide a source of liquidity not
otherwise available, and will eliminate the shareholders' exposure to
fluctuations in market value of the Ranger common stock, particularly
since the continuing availability of the NOLs is uncertain. See The
Tender Offer - Certain Information Concerning Ranger - Use of NOLs,
below.
o Because the shares are traded only on a limited basis in the
"over-the-counter" market, the Tender Offer affords to those
shareholders who desire liquidity an opportunity to sell all or a
portion of their shares at a price of $2.00 per share. For the 11-month
period ended November 30, 2000, the average trading volume per month
for the Ranger common stock was approximately 130,000 shares. The
Tender Offer may give shareholders the opportunity to sell a larger
number of shares than could likely be sold in the "over-the-counter"
market at a price greater than the "over-the-counter" market prices
reported prior to the announcement of the Tender Offer. See The Tender
Offer - Price Range of the Shares; Dividends on the Shares, below, for
historical share price information. In addition, where shares are
tendered by the registered owner of the shares directly to the
Depositary, the sale of those shares in the Tender Offer will permit
the seller to avoid the usual transaction costs associated with open
market sales.
o After the Tender Offer and the Merger are completed, any current Ranger
shareholder who remains a shareholder of Ranger will be able to derive
the benefits, if any, of the business of Bumgarner.
3. PLANS FOR RANGER; OTHER MATTERS
See The Tender Offer - Certain Information Concerning Bumgarner, below.
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4. INTERESTS OF CERTAIN PERSONS IN THE TENDER OFFER AND THE MERGER
As of the commencement date of the Tender Offer, none of Bumgarner, Mr.
Masters or any of their affiliates hold any interest in Ranger.
Each of the shareholders of Ranger now serving as directors of Ranger have
agreed to tender, or cause assigns of their shares to tender, their shares in
the Tender Offer. Upon the consummation of the Tender Offer and the Merger, the
employment agreement between Ranger and Morton E. Handel, Ranger's chief
executive office, will be terminated. Mr. Handel will enter into a consulting
agreement with Ranger providing for Mr. Handel to provide consulting services to
Ranger relating to its operations and transition of ownership for a period of
one year after the consummation of the Tender Offer and the Merger. Mr. Handel
will be paid a one-time consulting fee of $100,000 immediately upon the
consummation of the Tender Offer and the Merger.
Pursuant to the consulting agreement, dated May 20, 2000, which Ranger
currently has with S&H Consulting, Ltd., a business of which Mr. Handel is a
principal shareholder (the "S&H Consulting Agreement"), S&H Consulting Ltd. will
receive approximately $79,000, which is 10% of the difference between the value
of the consideration received by Ranger or its shareholders and the net asset
value of Ranger immediately prior to the Tender Offer and the Merger.
In addition, the S&H Consulting Agreement will be amended upon the
consummation of the Tender Offer and the Merger to provide that S&H Consulting
will render financial advisory and transition services to Ranger for a period of
one year after the consummation of the Tender Offer and the Merger for a fee of
$48,000, which is the amount of the annual consulting fee payable to S&H
Consulting, Ltd. under its current consulting agreement.
In addition, pursuant to the Agreement to Purchase Shares, dated December
29, 2000, by and between Bumgarner and Mr. Handel and the Agreement to Purchase
Shares, dated December 29, 2000, by and between Bumgarner and Isaac Perlmutter,
a director of Ranger, Bumgarner has agreed to purchase all shares held, directly
or indirectly, by Messrs. Handel and Perlmutter, or their assigns, which are
tendered in the Tender Offer but not purchased because of proration, at a price
of $2.00 per share (the "Handel and Perlmutter Purchase Agreements"). That
purchase will be made simultaneously with the closing of the Tender Offer. It is
being made because of the position expressed by the SEC in a letter to NASD
Regulation, Inc., dated January 21, 2000, that controlling shareholders of a
shell entity which merges with an operating business might be deemed to be
underwriters of shares which they subsequently sell and, therefore, have a
limited ability to sell their shares without registration under the securities
laws. Bumgarner agreed to this arrangement in order to avoid the expense of
registering those shares for resale.
Charles G. Masters, the holder of the majority of the equity interest in
Bumgarner, executed on December 29, 2000 an irrevocable proxy appointing Ranger
as agent and irrevocable proxy to vote:
o in favor of the Merger and the Merger Agreement;
o against any proposal for action or agreement that would result in a
breach of any covenant, representation or warranty or any other
obligation or agreement of Bumgarner under the Merger Agreement,
against any change in the directors of Bumgarner, against any change in
the present capitalization of Bumgarner, against any amendment to
Bumgarner's certificate of incorporation or bylaws which in each case
could reasonably be expected to impede, interfere with, delay, postpone
or materially adversely affect the transactions contemplated by the
Merger Agreement or the likelihood of the transactions being
consummated; and
o in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement, including the Tender
Offer.
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THE TENDER OFFER
1. TERMS OF THE TENDER OFFER
Upon the terms and subject to the conditions of the Tender Offer,
Bumgarner will accept for payment and will promptly pay $2.00 per share for up
to 4,225,000 shares of Ranger common stock validly tendered, and not withdrawn,
prior to the Expiration Date. The term "Expiration Date" shall mean 5:00 p.m.,
New York City time, on January 30, 2001 (the "Initial Expiration Date"), unless
and until Bumgarner shall have extended the period of time for which the Tender
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Tender Offer, as so extended by Bumgarner, shall
expire.
In the event of proration, Bumgarner will determine the proration factor
and pay for those tendered shares accepted for payment as soon as practicable
after the Expiration Date; however, Bumgarner does not expect to be able to
announce the final results of any proration and commence payment for shares
purchased until approximately seven to ten business days after the Expiration
Date. Certificates for all shares tendered and not purchased, including shares
not purchased due to proration, will be returned to the tendering shareholder,
or, in the case of shares tendered by book-entry transfer, will be credited to
the account maintained with the book-entry transfer facility by the participant
therein who so delivered the shares, at Bumgarner's expense as promptly as
practicable after the Expiration Date or termination of the Tender Offer without
expense to the tendering shareholders; provided, however, that under the Handel
and Perlmutter Purchase Agreements, Bumgarner has agreed to purchase all shares
held by Messrs. Handel and Perlmutter which are tendered in the Tender Offer but
not purchased because of proration, at a price of $2.00 per share. The purchase
will be made simultaneously with the closing of the Tender Offer. See Special
Factors - Interests of Certain Persons in the Tender Offer and the Merger,
above. Under no circumstances will interest on the purchase price be paid by
Bumgarner regardless of any delay in making such payment. In addition, if
certain events occur, Bumgarner may not be obligated to purchase shares under
the Tender Offer. See The Tender Offer - Conditions to the Tender Offer, below.
The Tender Offer is conditioned upon Bumgarner and Ranger simultaneously
consummating the Merger pursuant to the Merger Agreement and the other
conditions set forth in The Tender Offer - Conditions to the Tender Offer,
below. All references in the Offer Documents to a specific "Rule" or "Rules"
shall mean a Rule or Rules promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
If all conditions to the Tender Offer are not satisfied prior to the
Expiration Date, Bumgarner reserves the right, subject to the terms of the
Merger Agreement and subject to complying with applicable rules and regulations
of the SEC, to (i) decline to purchase any shares tendered in the Tender Offer
and terminate the Tender Offer and return all tendered shares to the tendering
shareholders, (ii) subject to the following sentence, waive any or all
conditions to the Tender Offer and, to the extent permitted by applicable law,
purchase all shares validly tendered, (iii) extend the Tender Offer by giving
oral or written notice of such extension to the Depository and, subject to the
right of shareholders to withdraw shares until the Expiration Date, retain all
shares which have been tendered during the period or periods for which the
Tender Offer is extended, or (iv) subject to the following sentence, amend the
Tender Offer. See The Tender Offer - Conditions to the Tender Offer, below.
Any extension, amendment or termination of the Tender Offer will be
followed as promptly as practicable by public announcement thereof, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rule
14d-4(c) under the
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<PAGE>
Exchange Act. Without limiting the obligation of Bumgarner under such Rule or
the manner in which Bumgarner may choose to make any public announcement,
Bumgarner currently intends to make announcements by issuing a press release to
the Dow Jones News Service.
If Bumgarner extends the Tender Offer, or if Bumgarner (whether before or
after its acceptance for payment of shares) is delayed in its purchase of, or
payment for, shares of Ranger common stock or is unable to pay for the shares
pursuant to the Tender Offer for any reason, then, without prejudice to
Bumgarner's rights under the Tender Offer, the Depositary may retain tendered
shares on behalf of Bumgarner, and such shares may not be withdrawn except to
the extent tendering shareholders are entitled to withdrawal rights as described
in The Tender Offer - Withdrawal Rights, below. However, the ability of
Bumgarner to delay the payment for shares which Bumgarner has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that
a bidder pay the consideration offered or return the securities deposited by, or
on behalf of, holders of securities promptly after the termination or withdrawal
of the Tender Offer.
If Bumgarner makes a material change in the terms of the Tender Offer or
the information concerning the Tender Offer or waives a material condition of
the Tender Offer, Bumgarner will disseminate additional Tender Offer materials
and extend the Tender Offer to the extent required by Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act. The minimum period during which the Tender
Offer must remain open following material changes in the terms of the Tender
Offer or information concerning the Tender Offer, other than a change in price
or a change in percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. In a public release, the SEC has stated that in its view
an offer must remain open for a minimum period of time following a material
change in the terms of a tender offer and that waiver of a material condition is
a material change in the terms of the offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published, or sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of ten business days may be required to allow adequate dissemination and
investor response. The requirement to extend the Tender Offer will not apply to
the extent that the number of business days remaining between the occurrence of
the change and the then-scheduled Expiration Date equals or exceeds the minimum
extension period that would be required because of such amendment. If, prior to
the Expiration Date, Bumgarner increases the consideration offered to holders of
Ranger common stock pursuant to the Tender Offer, such increased consideration
will be paid to all holders whose shares are purchased in the Tender Offer
whether or not such shares were tendered after such increase. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under
the Exchange Act.
Ranger has provided Bumgarner with Ranger's shareholder lists and security
position listings for the purpose of disseminating the Offer Documents to
holders of Ranger common stock. The Offer Documents will be mailed by Bumgarner
to record holders of Ranger common stock and will be furnished by Bumgarner to
brokers, dealers, banks and similar persons whose names, or in the names of
whose nominees, appear on the shareholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Ranger common stock.
Bumgarner has made no provisions in connection with the Tender Offer to
grant unaffiliated security holders access to the corporate files of Ranger or
to obtain counsel or appraisal services at the expense of Bumgarner.
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<PAGE>
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions to the Tender Offer
(including, if the Tender Offer is amended, the terms and conditions of any such
amendment), Bumgarner will purchase by accepting for payment and will pay for,
up to 4,255,000 shares of Ranger common stock validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with The Tender Offer -
Withdrawal Rights, below. All determinations concerning the satisfaction of such
terms and conditions will be within Bumgarner's sole discretion, which
determinations will be final and binding. See The Tender Offer - Terms of the
Tender Offer, above, and The Tender Offer - Procedure for Tendering Shares,
below. Subject to any limits which may be imposed by the Merger Agreement,
Bumgarner expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, shares in order to comply in whole or
in part with any applicable law. Any such delays will be effected in compliance
with Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to
pay the consideration offered or return the securities deposited by or on behalf
of holders of securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for shares accepted for payment pursuant to the
Tender Offer will be made only after timely receipt by the Depositary of (i)
certificates for such shares (or a timely Book-Entry Confirmation (as defined
below) with respect thereto), (ii) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal. The per share consideration paid to any holder of shares of Ranger
common stock pursuant to the Tender Offer will be the highest per share
consideration paid to any other holder of such shares pursuant to the Tender
Offer.
For purposes of the Tender Offer, Bumgarner will be deemed to have
accepted for payment, and thereby purchased, shares of Ranger common stock
properly tendered to Bumgarner and not withdrawn, if and when Bumgarner gives
oral or written notice to the Depositary of Bumgarner's acceptance for payment
of such shares. Payment for shares accepted for payment pursuant to the Tender
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payment from Bumgarner and transmitting payment to tendering
shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE TO
BE PAID BY BUMGARNER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE TENDER
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If Bumgarner is delayed in its acceptance for payment of, or payment for,
shares of Ranger common stock or is unable to accept for payment or pay for
shares pursuant to the Tender Offer for any reason, then, without prejudice to
Bumgarner's rights under the Tender Offer (including such rights as are set
forth in The Tender Offer - Terms of the Tender Offer, above, and The Tender
Offer - Procedure for Tendering Shares, below) (but subject to compliance with
Rule 14e-1(c) under the Exchange Act), the Depositary may, nevertheless, on
behalf of Bumgarner, retain tendered shares, and such shares may not be
withdrawn except to the extent tendering shareholders are entitled to exercise,
and duly exercise, withdrawal rights as described in The Tender Offer -
Withdrawal Rights, below.
If any tendered shares are not purchased pursuant to the Tender Offer for
any reason, or if certificates are submitted representing more shares than are
tendered, certificates representing shares not tendered or not accepted for
purchase will be returned to the tendering shareholder, or such other person as
the tendering shareholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Tender Offer. In the case of shares delivered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in The Tender Offer - Procedure for Tendering Shares,
below, such shares will be
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<PAGE>
credited to such account maintained at a Book-Entry Transfer Facility as the
tendering shareholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Tender
Offer. If no such instructions are given with respect to shares delivered by
book-entry transfer, any such shares not tendered or not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility designated
in the Letter of Transmittal as the account from which such shares were
delivered.
3. PROCEDURE FOR TENDERING SHARES
Valid Tender. For shares of Ranger common stock to be validly tendered
pursuant to the Tender Offer, either (i) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees, or in the case of a book-entry transfer, an Agent's
Message, and any other required documents, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date and either certificates for tendered shares must be
received by the Depositary at one of such addresses or such shares must be
delivered pursuant to the procedures for book-entry transfer set forth below
(and a Book-Entry Confirmation received by the Depositary), in each case prior
to the Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the shares at
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Tender Offer within two (2) business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facility's systems may make book-entry delivery of shares by causing
the Book-Entry Transfer Facility to transfer such shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedure for such
transfer. However, although delivery of shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
shareholder must comply with the guaranteed delivery procedures described below.
The confirmation of a book-entry transfer of shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Bumgarner
may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
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<PAGE>
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the systems of the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of the Ranger common stock) of shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender shares of Ranger
common stock pursuant to the Tender Offer and such shareholder's certificates
for shares are not immediately available or the procedures for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
shareholder's tender may be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Bumgarner, is received by the
Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents, are received by
the Depositary within three trading days after the date of execution
of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the NYSE is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for shares accepted
for payment pursuant to the Tender Offer will in all cases be made only after
timely receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon
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<PAGE>
when certificates for shares or Book-Entry Confirmations with respect to shares
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE OFFER PRICE TO BE PAID BY BUMGARNER FOR THE SHARES, REGARDLESS OF
ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
Bumgarner upon the terms and subject to the conditions of the Tender Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message) the tendering shareholder will
irrevocably appoint designees of Bumgarner as such shareholder's
attorneys-in-fact and proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
shareholder's rights with respect to the shares tendered by such shareholder and
accepted for payment by Bumgarner, and with respect to any and all non-cash
dividends, distributions, rights, other shares or other securities issued or
issuable in respect of such shares on or after December 29, 2000 (collectively,
"Distributions"). All such proxies will be considered coupled with an interest
in the tendered shares. Such appointment will be effective if and when, and only
to the extent that, Bumgarner accepts for payment shares tendered by such
shareholder as provided herein. All such powers of attorney and proxies will be
irrevocable and will be deemed granted in consideration of the acceptance for
payment of shares tendered in accordance with the terms of the Tender Offer.
Upon such appointment, all prior powers of attorney, proxies and consents given
by such shareholder with respect to such shares (and any and all Distributions)
will, without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such shareholder (and, if
given, will not be deemed effective). The designees of Bumgarner will thereby be
empowered to exercise all voting and other rights with respect to such shares
(and any and all Distributions), including, without limitation, in respect of
any annual or special meeting of Ranger's shareholders (and any adjournment or
postponement thereof), actions by written consent in lieu of any such meeting or
otherwise, as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper. Bumgarner reserves the right to require that,
in order for shares to be deemed validly tendered, immediately upon Bumgarner's
acceptance for payment of such shares, Bumgarner must be able to exercise full
voting, consent and other rights with respect to such shares (and any and all
Distributions), including voting at any meeting of shareholders.
Backup Federal Income Tax Withholding. To prevent backup federal income
tax withholding with respect to payments made to shareholders with respect to
the purchase price of Ranger shares purchased pursuant to the Tender Offer, each
such shareholder must provide the Depositary with his correct taxpayer
identification number and certify that such shareholder is not subject to backup
federal income tax withholding by completing the substitute Form W-9 included in
the Letter of Transmittal. See The Tender Offer - Certain Federal Income Tax
Consequences, below and Instruction 10 of the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of shares
of Ranger common stock will be determined by Bumgarner, in its sole discretion,
which determination will be final and binding. Bumgarner reserves the absolute
right to reject any or all tenders of any shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Bumgarner's counsel, be unlawful. Bumgarner also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any of the conditions of the Tender Offer or any defect or
irregularity in the tender of any shares of any particular shareholder, whether
or not similar defects or irregularities are waived in the case of other
shareholders. No tender of shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of Bumgarner, the
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<PAGE>
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Subject to the terms of the
Merger Agreement, Bumgarner's interpretation of the terms and conditions of the
Tender Offer (including the Letter of Transmittal and the instructions thereto)
will be final and binding.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section, tenders of shares are
irrevocable. Shares tendered pursuant to the Tender Offer may be withdrawn
pursuant to the procedures set forth below at any time prior to the Expiration
Date and, unless theretofore accepted for payment and paid for by Bumgarner
pursuant to the Tender Offer, may also be withdrawn at any time after February
26, 2001.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the shares to be withdrawn,
the number of shares to be withdrawn and the name of the registered holder of
the shares to be withdrawn, if different from the name of the person who
tendered the shares. If certificates for shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in The Tender Offer - Procedure for
Tendering Shares, above, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn shares and otherwise comply with the Book-Entry Transfer
Facility's procedures.
Withdrawals of tenders of shares of Ranger common stock may not be
rescinded, and any shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Tender Offer. However, withdrawn shares may
be re-tendered by following one of the procedures described in The Tender Offer
- Procedure for Tendering Shares, above, any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Bumgarner, in its sole discretion,
which determination will be final and binding. None of Bumgarner, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States Federal income tax
consequences of the Tender Offer relevant to beneficial holders of shares whose
shares are tendered and accepted for payment pursuant to the Tender Offer. The
discussion is for general information only and does not purport to consider all
aspects of Federal income taxation that might be relevant to beneficial holders
of shares. The discussion is based on current provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), existing, proposed and temporary
regulations promulgated thereunder, rulings, administrative pronouncements and
judicial decisions, changes to which could materially affect the tax
consequences described herein and could be made on a retroactive basis. The
discussion applies only to beneficial holders of shares in whose hands shares
are capital assets within the meaning of Section 1221 of the Code and may not
apply to beneficial holders (i) who acquired their shares pursuant to the
exercise of employee stock options or other compensation arrangements with
Ranger, and (ii) who are subject to special tax treatment under the Code (such
as dealers in securities, insurance companies, other financial institutions,
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<PAGE>
regulated investment companies and tax-exempt entities). In addition, this
discussion does not discuss the Federal income tax consequences to a beneficial
holder of shares who, for United States Federal income tax purposes, is a
non-resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust, nor does it consider the effect of any foreign, state
or local tax laws.
No ruling will be requested from the Internal Revenue Service (the "IRS")
regarding the tax consequences of the Tender Offer and the Merger and,
accordingly, there can be no assurance that the IRS will agree with the
discussion of the tax consequences set forth below.
Tax Consequences to Existing Shareholders of Ranger
The tax consequences to the existing shareholders of Ranger of the Tender
Offer should be the same whether or not the Tender Offer and the Merger are
treated as an integrated transaction or as separate transactions.
Receipt of Cash in Tender Offer. In general, for federal income tax
purposes, shareholders of Ranger receiving cash in exchange for shares pursuant
to the Tender Offer should be treated as having sold their shares to Bumgarner
("Purchased Shares"). Capital gain or loss will be recognized with respect to
Purchased Shares in an amount equal to the difference between the amount of cash
received and such shareholder's adjusted tax basis in the shares surrendered.
Gain or loss will be computed separately for each identifiable block of shares
surrendered pursuant to the Tender Offer. Such gain or loss will be long-term
capital gain or loss if, as of the date the shares are accepted for payment
pursuant to the Tender Offer, the holder thereof has held such shares for more
than one year. There are significant limitations on the deductibility of capital
losses by individuals or corporations. Capital losses can offset capital gains
on a dollar-for-dollar basis and, in the case of an individual shareholder,
capital losses in excess of capital gains can be deducted to the extent of
$3,000 annually. An individual can carry forward unused capital losses
indefinitely. A corporation can utilize capital losses only to offset capital
gain income; a corporation's unused capital losses can be carried back three
years and forward five years.
Under present law, long-term capital gains recognized in 2001 are taxable
at a maximum rate of 20% for individuals and 35% for corporations, whereas
ordinary income is taxable at a maximum rate of 39.6% for individuals and 35%
for corporations.
Since it is expected that the loan obtained by Bumgarner to pay for the
shares tendered will be repaid with Ranger funds, the IRS may treat shareholders
of Ranger receiving cash in exchange for shares pursuant to the Tender Offer as
having transferred shares back to Ranger in exchange for cash (the "Redeemed
Shares"). Capital gain or loss will be recognized by a shareholder of Ranger
with respect to the Redeemed Shares only if the purchase of such shares
qualifies for sale or exchange treatment under Section 302 of the Code. Under
Section 302(b) of the Code, sale or exchange treatment will be available with
respect to Redeemed Shares for each Ranger shareholder who will not own after
completion of the Tender Offer and Merger, either actually or under the
constructive ownership rules of Section 318 of the Code, shares constituting 80%
or more of the percentage of shares actually or constructively owned by such
shareholder immediately before the consummation of the Tender Offer, provided
that such shareholder owns (actually or constructively) less than 50% of the
shares after the Tender Offer and Merger. If the requirements of Section 302(b)
are not satisfied, a shareholder may nonetheless be entitled to sale or exchange
treatment with respect to Redeemed Shares in the event that the redemption of
such shares is "not essentially equivalent to a dividend" within the meaning of
Section 302(b)(1) of the Code by reason of being a "meaningful reduction" in the
shareholder's interest in Ranger. The IRS has indicated in a published ruling
that even a small reduction in the proportionate interest of a small minority
shareholder in a publicly-held corporation who owns only a nominal percentage of
the corporation's stock and exercises no control over corporate affairs may
constitute such a "meaningful reduction." For
17
<PAGE>
purposes of Sections 302(b)(1) and 302(b)(2) of the Code, stock is
constructively owned under Section 318 of the Code if the shareholder has an
option or other right to purchase the stock or if the shareholder bears a
specified relationship to the owner of the stock (such as a shareholder owning
50% or more in value of the stock of a corporation that owns, actually or
constructively, shares of Ranger or an individual shareholder that is a member
of the family of another shareholder). In the case of any shareholder who does
not tender shares in the Tender Offer, such shareholder will not be entitled to
sale or exchange treatment under Section 302 of the Code if such shareholder's
percentage ownership of common stock of Ranger after the Merger is not less than
such shareholder's percentage ownership of shares in Ranger before consummation
of the Tender Offer, taking into account actual and constructive stock
ownership. Each existing shareholder of Ranger should consult his own personal
tax advisor to determine whether he will qualify for sale or exchange treatment
under Section 302 of the Code with respect to shares purchased in the Tender
Offer.
Each Ranger shareholder whose sale of Redeemed Shares qualifies for sale
or exchange treatment under Section 302 of the Code will recognize capital gain
or loss with respect to such shares as described in the first paragraph above.
If a Ranger shareholder is not entitled to sale or exchange treatment with
respect to his sale of Redeemed Shares in the Tender Offer pursuant to Section
302 as described in the second preceding paragraph above, then the cash received
by such shareholder in exchange for such shares will be taxable as a dividend
(i.e., as ordinary income) to the extent of Ranger's current and accumulated
earnings and profits. Any such cash in excess of Ranger's earnings and profits
will be treated as a return of capital to the extent of the shareholder's
adjusted tax basis in all of his shares (including his redeemed shares and
retained shares) and the balance of such cash would be treated as capital gain.
Corporate shareholders may be entitled to a dividends received deduction under
Section 243 of the Code with respect to that portion (if any) of the cash
received in the Tender Offer that is taxable as a dividend, subject to potential
limitations under the holding period and debt financed rules of Sections 246(c)
and 246A of the Code and to basis reduction under Section 1059 of the Code for
the nontaxed portion of each dividend. Each shareholder of Ranger that is a
corporation is urged to consult its own personal tax advisor to determine
whether a dividend received deduction will be available to such shareholder and
the tax consequences of that deduction.
Backup Withholding. Payments in connection with the Tender Offer may be
subject to "backup withholding" at a 31% rate, unless the shareholder is (i) a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a correct taxpayer identification
number, certifies as to no loss of exemption from backup withholding and
otherwise complies with the applicable requirements of the backup withholding
rules. Any amount paid as backup withholding will be creditable against the
holder's federal income tax liability.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL HOLDER OF
SHARES IS URGED TO CONSULT SUCH BENEFICIAL HOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH BENEFICIAL HOLDER OF THE TENDER OFFER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The table below sets forth the high and low sales prices per share for
Ranger common stock for the periods indicated as reported to the NASD by the
NASD's member firms. Ranger common stock is not listed for trading on any
securities exchange or on Nasdaq or in any other inter-dealer quotation system
of a registered national securities association and there is no established
public trading market for
18
<PAGE>
Ranger common stock. The stock price information reported in the tables below
represents a limited number of transactions in Ranger common stock in the
"over-the counter" market during the periods indicated. The Ranger common
stock's trading symbol is "RNGR."
High/Asked Low/Bid
---------- -------
1998
Fourth Quarter $0.75 $0.28
1999
First Quarter $0.59 $0.28
Second Quarter 0.59 0.38
Third Quarter 1.22 0.31
Fourth Quarter 1.50 0.59
2000
First Quarter $2.00 $1.13
Second Quarter 1.66 1.19
Third Quarter 1.63 1.41
Fourth Quarter (through
December 27)
Ranger has not paid any cash dividend on its stock since 1974 and has no
expectation of doing so in the foreseeable future. Under the terms of the Merger
Agreement, Ranger is not permitted to declare or pay dividends with respect to
the Ranger shares without the prior written consent Bumgarner.
As of December 27, 2000, the latest date Bumgarner could obtain sale
information before the public announcement of the Tender Offer, the last sale
price of shares of Ranger common stock in the "over-the-counter" market reported
to the NASD was $1.75 on December 27, 2000.
7. POSSIBLE EFFECTS OF THE TENDER OFFER ON THE MARKET FOR THE RANGER SHARES;
SECURITIES EXCHANGE ACT REGISTRATION
Market for the Shares. The purchase of shares of Ranger common stock by
Bumgarner pursuant to the Tender Offer will reduce the number of shares that
might otherwise trade publicly and will reduce the number of holders of shares,
which, depending upon the number of shares so purchased, could adversely affect
the liquidity and market value of the remaining shares held by the public.
Following the simultaneous consummation of the Tender Offer and the Merger and
subsequent closing of the Handel and Perlmutter Purchase Agreements, up to
approximately 95% of the outstanding shares may be owned by Bumgarner. Bumgarner
cannot predict whether the reduction in the number of shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the shares or whether it would cause
future market prices to be greater or less than the Offer Price.
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<PAGE>
Stock Quotation. The Ranger common stock is not listed on any securities
exchange or authorized to be quoted on Nasdaq or in any other inter-dealer
quotation system of a registered national securities association. As of December
27, 2000, the latest date Bumgarner could obtain sale information before the
date of the public announcement of the Tender Offer, the last reported sale
price of the shares in the "over-the-counter" market reported to the NASD was
$1.75 on December 27, 2000. See The Tender Offer - Price Range of the Shares;
Dividends on the Shares, above for additional information regarding reported
sale prices for the shares.
Exchange Act Registration. The Ranger common stock is currently registered
under the Exchange Act. Registration of the Ranger common stock under the
Exchange Act may be terminated upon application of Ranger to the SEC if the
Ranger common stock is neither listed on a national securities exchange nor held
by 300 or more holders of record. Termination of registration of the shares of
the Ranger common stock under the Exchange Act would substantially reduce the
information required to be furnished by Ranger to its shareholders and to the
SEC and would make certain provisions of the Exchange Act no longer applicable
to Ranger, such as the short-swing profit recovery provisions of Section 16(b),
the requirement of furnishing a proxy statement in connection with shareholders'
meetings pursuant to Section 14(a) or 14(c) and the related requirement of
furnishing an annual report to shareholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of Ranger and persons holding
"restricted securities" of Ranger to dispose of such securities pursuant to Rule
144 or Rule 144A promulgated under the Securities Act of 1933, as amended, may
be impaired or eliminated.
Bumgarner presently does not intend to seek termination of the
registration of the shares of the Ranger common stock under the Exchange Act.
8. CERTAIN INFORMATION CONCERNING RANGER
According to Ranger's Form 10-KSB for the fiscal year ended December 31,
1999, Ranger's principal executive offices are located at One Regency Drive,
Bloomfield, Connecticut 06002, and Ranger's telephone number is (860) 726-1208.
The following description of Ranger and its business has been taken from
Ranger's Form 10-KSB for the fiscal year ended December 31, 1999 and from
Ranger's Form 10-QSB for the quarterly period ended September 30, 2000, and is
qualified in its entirety by reference to such reports: Ranger was organized in
1961, as the successor to the Connecticut Leather Company, which was founded in
1932. From 1961 through 1990, Ranger was known as "Coleco Industries, Inc."
In 1988, Ranger, then known as Coleco Industries, Inc., filed a voluntary
petition in bankruptcy, and in 1990, the Plan was approved by the bankruptcy
court and became effective as of February 28, 1990, and Ranger emerged from
Chapter 11 pursuant thereto. Ranger emerged from the Chapter 11 proceeding with
$950,000 in cash and no liabilities. Under the Plan, $5.5 million was
transferred to the Product Liability Trust, to process and liquidate product
liability claims pending or arising after May 15, 1990.
On May 8, 2000, an order of the United States Bankruptcy Court for the
Southern District of New York which was docketed on April 26, 2000 became final
and non-appealable. The order authorized the trustee of the Product Liability
Trust (i) to obtain insurance covering all claims made against the Product
Liability Trust where the injury giving rise to the claim occurred between May
15, 1990 and May 15, 2020, and (ii) after paying $1,156,000 for the insurance
premiums, to make a cash distribution to Ranger of all of the remaining funds in
the Product Liability Trust other than $600,000 which shall remain in the
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<PAGE>
Product Liability Trust to pay the administrative expenses of the Product
Liability Trust. The amount of the net distribution to Ranger, which was made in
May 2000, was $11,002,632.
Ranger's financial resources at the present time, other than its cash on
hand, are the possible utility of NOLs of approximately $178.4 million as of
September 30, 2000. The NOLs result primarily from operating losses sustained by
Ranger prior to 1990 and have sheltered Ranger's modest interest income and the
income of the Product Liability Trust from Federal income taxation and, until
1999, from state income taxation. The income of the Product Liability Trust, if
any, continues to be taxable to Ranger. As more fully discussed below, the
continuing availability of the NOLs is uncertain.
Use of NOLs. On January 6, 1992, the Department of the Treasury
promulgated new Treasury Regulations. These regulations interpret Section 269 of
the Code which permits the IRS to deny corporations the ability to use tax
benefits, such as NOLs where control of the corporation was acquired for the
principal purpose of avoiding tax. The regulations provide that if a corporation
in a bankruptcy reorganization that qualifies for an exemption from the general
rule limiting the use of net operating loss carryforwards does not carry on a
significant amount of an active trade or business during and subsequent to such
bankruptcy reorganization, the IRS will presume, absent a showing of strong
evidence to the contrary, that the principal purpose of the reorganization was
to evade or avoid Federal income tax and that Section 269 should apply. The
regulations are only effective, by their terms, with respect to acquisitions of
control of corporations occurring after August 14, 1990 and, accordingly, they
do not apply to Ranger.
Despite the inapplicability of these regulations to Ranger, the issue of
essentially inactive reorganized companies with NOLs that survive bankruptcy
intact has been firmly raised in the eyes of the IRS. Accordingly, due to
Ranger's disposition of its historic toy businesses pursuant to the Plan and
Ranger's switch to a new business of acquiring investments, it is possible that
the IRS may assert that Ranger has not carried on a significant trade or
business during and subsequent to its reorganization. If such an assertion is
made and ultimately sustained, then Ranger would be unable to utilize its
estimated $178.4 million of net operating loss carryforwards. This could have a
materially adverse effect on Ranger's ability to attract outside investors
willing to invest in Ranger. Notwithstanding these regulations, there can be no
assurance that Ranger will be able to attract sufficient outside investment to
allow it to continue to operate, once its current working capital is depleted.
The financial statements do not include any adjustments that might result from
the resolution of these uncertainties.
Properties. As of the effective date of the Plan, Ranger had no material
properties, and it has acquired none since then. Ranger currently has the use of
office space in Bloomfield, Connecticut, and leases space in a public warehouse
for the storage of some of its business records.
Selected Pro Forma Financial Data. The following pro forma financial
statements have been prepared to reflect the effect of the proposed Merger and
the simultaneous completion of the Tender Offer for 4,225,000 shares of Ranger's
previously issued and outstanding common stock for $2.00 per share. The
historical financial statements set forth below are derived from unaudited
financial information of Ranger and Bumgarner as of November 1, 2000. The pro
forma adjustments are based upon management's assumptions as discussed in Note
1.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the Merger and Tender Offer occurred at January 1, 2000. However, the pro forma
condensed financial statements are not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the Merger and Tender Offer actually occurred earlier.
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<PAGE>
Ranger Industries, Inc. and
Bumgarner Enterprises, Inc.
Pro Forma Condensed Consolidated Balance Sheet
November 1, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Bumgarner Ranger Adjustments Consolidated
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents:
Unrestricted $ 4,537 $ 10,186,900 (1b) $ (8,450,000) $ 1,741,437
Restricted (1b) 8,450,000 8,450,000
Other current assets - 3,483 3,483
--------- ------------- ------------ ------------
Total current assets 4,537 $ 10,190,383 - 10,194,920
--------- ------------- ------------ ------------
Oil and gas properties, using successful efforts
method 161,316 - 161,316
--------- ------------- ------------ ------------
$165,853 $ 10,190,383 $ - $10,356,236
========= ============= ============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 30,000 $ 163,721 (1c) $ 225,000 $418,721
Note payable (1b) 8,450,000 8,450,000
Due to related party 149,316 - 149,316
-------- ------------- ------------ ------------
Total current liabilities 179,316 163,721 8,675,000 9,018,037
-------- ------------- ------------ ------------
Minority interest in joint venture 16,536 - 16,536
-------- ------------- ------------ ------------
Stockholders' equity:
Common stock 14,720 52,786 67,506
Additional paid-in capital - 12,664,062 12,664,062
Accumulated deficit (44,719) (2,690,186) (1c) (225,000) (2,959,905)
Treasury stock, at cost - - (1b) (8,450,000) (8,450,000)
-------- ------------- ------------ ------------
Total stockholders' equity (29,999) 10,026,662 (8,675,000) 1,321,663
-------- ------------- ------------ ------------
$165,853 $ 10,190,383 $ - $10,356,236
======== ============= ============ ============
</TABLE>
22
<PAGE>
Ranger Industries, Inc and
Bumgarner Enterprises, Inc.
Pro Forma Condensed Consolidated Statement of Operations For the
period from January 1, 2000 through November 1, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Bumgarner Ranger Adjustment Consolidated
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
---------- ---------- ----------- ------------
Operating costs and expenses:
Administrative 30,000 1,790,667 1,820,667
Stock based compensation 14,719 - 14,719
Consulting and professional fees - 223,079 (1c) 225,000 448,079
----------- ------------
Total operating expenses 44,719 2,013,746 225,000 2,283,465
---------- ---------- ----------- ------------
Interest income - 251,509 - 251,509
---------- ---------- ----------- ------------
Loss before income taxes (1,762,237) (225,000) (2,031,956)
Income tax expense - 12,030 - 12,030
---------- ---------- ----------- ------------
Net loss $(44,719) $(1,774,267) $(225,000) $(2,043,986)
========== =========== =========== ============
Pro forma loss per common share $(44.72) $ (0.34) $ (0.13)
========== =========== ============
Weighted average number of shares 1,000 5,278,644 15,773,644
========== =========== ============
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements
Notes to Pro Forma Condensed Consolidated Financial Statements
1. Pro forma adjustments:
The pro forma adjustments reflected in the pro forma financial statements set
forth above give effect to the following:
(a) The Merger in consideration of Ranger's issuance of 14,720,000 shares for
100% of Bumgarner's issued and outstanding stock. This transaction has been
accounted for as though it were a re-capitalization of Bumgarner and a sale
of shares by Bumgarner in exchange for the net assets of Ranger.
(b) Tender Offer by Bumgarner for 4,225,000 issued and outstanding shares of
Ranger common stock at $2.00 per share. It is assumed that the Tender Offer
will be financed by a $8,450,000 short-term bank loan which will be secured
by $8,450,000 of Ranger's cash and cash equivalents.
(c) Accrued $225,000 of consulting and professional fees associated with the
Merger and Tender Offer.
2. Oil and gas properties are stated in the pro forma condensed consolidated
balance sheet set forth above based upon generally accepted accounting
principles and does not reflect the underlying fair values of such
properties.
3. Note payable/receivable:
Bumgarner acquired a 74.415% interest in Joint Venture - Henryetta in October
2000. Consideration for this equity interest was in the form of a $2,073,728
promissory note payable to Henryetta, which bears interest at 6% and is
payable in full by October 10, 2001. Bumgarner will forfeit its interest in
Henryetta (pro-rata with any unpaid balance) if the note is not paid by the
due date. (Since the note is payable to an entity included in the pro forma
consolidated financial statements, the note payable and related interest has
been eliminated in consolidation). Results of operations of Henryetta, which
are nominal,
23
<PAGE>
have been included in the pro forma consolidated financial statements set
forth above from the October 2000 date of acquisition through November 1,
2000.
Available Information. Ranger is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the SEC relating to
its business, financial condition and other matters. Information as of
particular dates concerning Ranger's directors and officers, their remuneration,
options granted to them, the principal holders of Ranger's securities and any
material interests of such persons in transactions with Ranger is required to be
disclosed in proxy statements distributed to Ranger's shareholders and filed
with the SEC. Reports, proxy statements and other information filed with the SEC
can be inspected and copied at the public reference facilities of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at Seven World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such information can also be obtained by mail upon payment of
the SEC's prescribed rates by writing to the SEC's Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a website
at http://www.sec.gov that contains reports, proxy statements and other
information relating to Ranger which have been filed via the EDGAR System.
From time to time, some officers of Ranger may assist shareholders with
tendering their Ranger common stock, or provide information necessary for them
to do so.
9. CERTAIN INFORMATION CONCERNING BUMGARNER
General. Bumgarner Enterprises was incorporated under the laws of the
State of Florida in March 1998. Bumgarner's principal executive offices are
located at 3400 82nd Way North, St. Petersburg, FL 33710. Its telephone number
is (727) 381-4904, and its facsimile number is (727) 381-3904. Bumgarner
Enterprises has engaged in no business operations until, in October 2000,
Bumgarner purchased a 74.415% interest in the Henryetta Joint Venture, a joint
venture expecting to engage in exploration drilling for oil and gas in Okfuskee
and Coal counties, Oklahoma.
Neither Bumgarner nor Mr. Masters owns any Ranger common stock or has
transacted any business with Ranger or any of its affiliates.
Oil and Gas Exploration and Development - Purchase of Joint Venture
Interest. Bumgarner Enterprises, Inc. has not been engaged in any significant
business activities since its incorporation. Bumgarner intends to place its
emphasis in the oil and gas segment -- acquiring interests in non-producing or
producing oil or gas properties and participating in drilling operations.
As its first effort in that direction, in October 2000, Bumgarner
purchased a 74.415% working interest in the Henryetta Joint Venture, a joint
venture formed by Inter-Oil & Gas Group, Inc., in September 1998 (the "Henryetta
Joint Venture" or the "Joint Venture"). (Bumgarner will be responsible for
approximately 93% of all costs of the Joint Venture, including the drilling of
wells, and will receive 93% of all net revenues until it receives a return of
its investment (payout); after payout, Bumgarner's interest will reduce to
74.415%). The Henryetta Joint Venture was formed under Oklahoma law and owns
four leasehold interests (consisting of 1,520 gross, 664 net, acres) in Okfuskee
and Coal counties, Oklahoma. The property at present has no producing oil or gas
wells on it, although (as described below) the Joint Venture plans initially to
drill (and, if warranted, complete) four wells (one on each lease) at a total
cost of approximately $2,200,000 (of which Bumgarner's share will be
approximately 93%). Bumgarner's investment in the Joint Venture will provide
funding for the project. Bumgarner has included more information about these
exploratory oil and gas leases, below.
24
<PAGE>
Bumgarner purchased its interest in the Joint Venture in exchange for
$2,073,728, represented by a promissory note bearing interest at 6% per annum,
due in full on October 10, 2001 (with certain incremental payments to be made
before maturity). Bumgarner intends to use funds to be provided by Ranger
following the completion of the Merger and the Tender Offer to meet its
obligations under this note. There are three members of the Joint Venture in
addition to Bumgarner and Inter-Oil & Gas Group (the manager of the Joint
Venture which owns a 20% after-payout interest in the Joint Venture).
Inter-Oil & Gas Group, Inc. is the manager of the Joint Venture. There is
no affiliation or other relationship between Bumgarner and its affiliates or
Inter-Oil & Gas Group. As manager, Inter-Oil & Gas Group may (in its discretion)
make calls to the members of the Joint Venture for additional assessments for
drilling and other operating activities. Bumgarner will be responsible to pay
approximately 93% of any assessment. Under the Joint Venture agreement, revenues
and expenses will be shared by each member of the Joint Venture in accordance
with its interest. This means that:
o Bumgarner will share in 93% of all revenues and expenses before payout,
and 74.415% after payout;
o Inter-Oil & Gas Group (which has no investment in the Joint Venture)
will be entitled to share in 20% of all revenues and expenses after
payout; and
o the other members will collectively share the remaining 7% (before
payout) and 5.585% after payout (which they purchased in 1998 and 1999,
and for which they paid $16,732 per 1%).
As manager of the Joint Venture, Inter-Oil & Gas Group has a significant
amount of authority to direct the Joint Venture's activities, although it is
obligated to perform its duties "in an efficient and businesslike manner with
due caution and in accordance with the established practices of the oil and gas
industry." Under the agreement, the Joint Venture has agreed to indemnify and
hold its manager harmless from any liability except to the extent it results
from the manager's gross negligence or willful misconduct. The Joint Venture's
obligation to indemnify the manager is limited to the Joint Venture's assets,
and no member will have personal liability to the manager resulting from any
indemnification obligation.
The Joint Venture is, however, treated as a general partnership under
Oklahoma law. Consequently, Bumgarner and the other members of the Joint Venture
are potentially directly liable, jointly and severally, for any obligations the
Joint Venture may owe to third parties who have not limited their right to
proceed against the members. If a well casualty occurs, or any form of personal
or other injury to a person working on the Joint Venture's property occurs, the
person suffering the injury may seek to hold the Joint Venture and its members
jointly and severally liable, even when resulting from the manager's negligence,
gross negligence, or willful misconduct. To the extent that any damages exceed
the assets of the Joint Venture and any insurance proceeds, Bumgarner and the
other members may be directly responsible. It is customary in the oil and gas
industry for the manager of a joint venture such as the Henryetta Joint Venture
to maintain insurance to meet anticipated contingencies. Although the Joint
Venture does not have any insurance at the present time, it intends to obtain
appropriate insurance before it commences any drilling activities on the
properties.
The agreement provides that the Joint Venture will pay Inter-Oil & Gas
Group a management fee equal to 7.2% of the total subscriptions, or
approximately $145,000 based on the subscription being made by Bumgarner. The
agreement provides that the Joint Venture will pay, or reimburse the manager
for, operating expenses, but does not provide for the payment of any additional
fee to the manager for performing his duties as manager. The Joint Venture will
pay the manager an operating fee of $25,000 each in connection with the two
initial wells to be drilled in Coal County, and approximately $12,000 for each
of the two wells to be drilled in Okfuskee County.
25
<PAGE>
The agreement restricts the ability of Bumgarner or any other member to
transfer its Joint Venture interest. Finally, the Joint Venture will
automatically terminate, unless renewed, in 2010.
General Oil and Gas Exploration and Development - Company Strategy.
Bumgarner expects to engage in a broad range of activities associated with the
oil and gas business in an effort to develop oil and gas reserves through the
Henryetta Joint Venture and individually, outside of the Joint Venture. With the
assistance of its management, independent contractors Bumgarner expects to
retain from time to time, and, to a lesser extent, unsolicited submissions,
Bumgarner hopes to identify and acquire additional prospects that Bumgarner
believes are suitable for drilling and acquisition, either through the Joint
Venture or independently from the Joint Venture. As a result of the Joint
Venture, its primary area of interest is in the state of Oklahoma, but Bumgarner
expects to participate in the oil and gas industry throughout the Midwest and
western states to the extent its financing will permit.
At the present time, Bumgarner is dependent on the completion of the
Merger to finance its investment in the Henryetta Joint Venture, and it will be
dependent on additional financing to finance any further oil and gas
acquisitions or drilling activities. Even if the Merger occurs, Bumgarner may
not be able to finance oil and gas acquisitions solely through its own
resources.
Consequently, Bumgarner anticipates identifying undeveloped or developed
prospects or production to acquire and then seek other industry investors or
other interested parties who may be willing to participate in these activities
with Bumgarner. Bumgarner anticipates retaining a promotional interest in any
prospects, but generally it may have to finance a portion (and sometimes a
significant portion) of any acquisition and drilling costs. Bumgarner may be
able to acquire interests in producing properties by issuing shares of Ranger
common stock, but it will probably have to do so at a discount from the market
because of the restricted nature of the shares that can be issued. This will
make the issuance of Bumgarner stock as consideration for prospects more
difficult and expensive than were Bumgarner able to issue registered stock.
Where Bumgarner acquires an interest in acreage on which exploration or
development drilling is planned, it does not expect to assume the entire risk of
acquisition or drilling. Rather, Bumgarner will assess the relative potential
and risks of each prospect and determine the degree to which it will participate
in the exploration or development drilling. Generally, it is more beneficial to
invite industry participants to share the risk and the reward of the prospect by
financing some or all of the costs of drilling contemplated wells. In such
cases, Bumgarner may retain a carried working interest, a reversionary interest,
or may be required to finance all or a portion of its proportional interest in
the prospect. Although this approach reduces its potential return should the
drilling operations prove successful, it also reduces its risk and financial
commitment to a particular prospect.
Conversely, Bumgarner may from time to time participate in drilling
prospects offered by other persons if Bumgarner believes that the potential
benefit from the drilling operations outweighs the risk and the cost of the
proposed operations. This approach allows Bumgarner to diversify into a larger
number of prospects at a lower cost per prospect, but these operations (commonly
known as "farm-ins") are generally more expensive to Bumgarner than operations
where it offers the participation to others (known as "farm-outs").
Principal Products Produced and Services Rendered. Bumgarner has produced
no oil, gas, or other products to date. If Bumgarner's activities with the
Henryetta Joint Venture are successful (as to which Bumgarner can offer no
assurance), Bumgarner anticipates that the Joint Venture will produce crude oil
and natural gas for its account during calendar year 2001. Crude oil and natural
gas are generally sold to various entities, including pipeline companies, which
usually service the area in which its producing wells are located.
26
<PAGE>
Distribution Methods of the Products or Services. Bumgarner is not
involved in, and it does not expect to become involved in, the distribution
aspect of the oil and gas industry.
Status of any Publicly Announced New Products or Services. Bumgarner does
not have, and it does not expect to have, a new product or service that would
require the investment of a material amount of its assets or which Bumgarner
believes is material to its business.
Competitive Business Conditions. The exploration for and development,
production and acquisition of oil and gas are subject to intense competition.
The principal methods of competition for the acquisition of oil and gas are the
payment of:
o cash bonuses at the time of the acquisition of leases;
o delay rentals and the amount of annual rental payments;
o advance royalties and the use of differential royalty rates; and
o the stipulations requiring exploration and production commitments by
the lessee.
Many of its potential competitors in the oil and gas industry have vast
experience, are larger and have significantly greater financial resources,
existing staff and labor forces, equipment, and other resources than Bumgarner
does. Consequently, these competitors will likely be in a better position to
compete for projects in the oil and gas industry, the only industry in which
Bumgarner plans to compete.
In addition, the availability of a ready market for oil and gas will
depend upon numerous factors beyond Bumgarner's control, including the extent of
domestic production and imports of oil and gas, proximity and capacity of
pipelines, and the effect of federal and state regulation of oil and gas sales,
as well as environmental restrictions on exploration and usage of oil and gas.
Further, Bumgarner expects that competition for leasing of oil and gas prospects
will become even more intense in the future. Bumgarner expects to have only a
minimal competitive position in the oil and gas industry.
Sources and Availability of Raw Materials. To conduct business in the oil
and gas industry, Bumgarner will depend on the availability of such items as
drilling rigs and other equipment, casing pipe, drilling mud and other supplies,
core drilling equipment, and other equipment necessary for its operations.
Although Bumgarner foresees no short supply or difficulty in acquiring any
equipment relevant to the conduct of its business, Bumgarner cannot offer any
assurances that these items will be available or that Bumgarner will be able to
acquire the items on economically feasible terms.
Dependence Upon One or a Few Major Customers. Since Bumgarner has had no
production to date, it has had no major customers. Generally, however, Bumgarner
anticipates that a limited number of purchasers will purchase any oil and gas
Bumgarner or the Joint Venture may produce. Even in such a case, however,
Bumgarner does not believe the loss of any customer would adversely impact
revenues because it believes that oil and gas sales are primarily market driven
and are not dependent on particular purchasers. Consequently, it believes that
substitute purchasers would be available based on the widespread uses of and the
need for oil and gas.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
or Labor Contracts. Bumgarner does not own any patents, licenses, franchises, or
concessions. The Joint Venture owns certain oil and gas interests which were
granted by private landowners.
Need for Governmental Approval of Principal Products or Services.
Bumgarner does not need to seek government approval of its principal products.
27
<PAGE>
Effects of Existing or Probable Governmental Regulation. Oil and gas
exploration and production are open to significant governmental regulation
including worker health and safety laws, employment regulations and
environmental regulations. Operations that occur on public lands may be subject
to further regulation by the Bureau of Land Management, the U.S. Army Corps of
Engineers, or the U.S. Forest Service as well as other federal and state
agencies. Bumgarner does not anticipate that these regulations will have an
adverse impact on its ability (directly, through the Joint Venture, or through
other entities in which it may become involved) to participate in the oil and
gas industry.
Estimate of Amounts Spent on Research and Development Activities.
Bumgarner has not engaged in any material research and development activities
since its inception and it does not expect to do so.
Costs and Effects of Compliance with Environmental Laws (federal, state
and local). Because Bumgarner expects to be engaged in extracting natural
resources, its business will be subject to various federal, state and local
provisions regarding environmental and ecological matters. Therefore, compliance
with environmental laws may necessitate significant capital outlays, affect its
earnings potential, and cause material changes in its current and proposed
business activities. Based on these laws as they currently exist, however, it
does not expect that they will materially hinder or adversely affect its
business.
Employees. At the present time, Bumgarner has one employee, Charles G.
Masters, president of Bumgarner, who has accrued a salary of $10,000 per month
since August 1, 2000. This salary will be paid to Mr. Masters after the
completion of the Tender Offer and the Merger.
Properties - General Information. Bumgarner owns no direct interest in any
oil or gas properties at the present time. Its only interest is through the
Henryetta Joint Venture. All of the following information relates to Bumgarner's
indirect 74.415% after payout interest in the Henryetta Joint Venture. As noted
above, Bumgarner will forfeit that entire interest unless it pays the amounts
due on its promissory note to the Joint Venture by October 10, 2001 with certain
incremental payments to be made before maturity.
Properties - Undeveloped Acreage - Lease Descriptions. All of the
interests held by the Henryetta Joint Venture are in undeveloped acreage in Coal
and Okfuskee counties, in south central and central Oklahoma, respectively. This
prospect consists of four leases from private landowners. The following table
summarizes the Joint Venture's interest in its four leases.
<TABLE>
<CAPTION>
Net Acres (2)
Gross (to the Joint Net Acres (3)
Land description Acres (1) Venture) (to Bumgarner)
<S> <C> <C> <C> <C>
Lease A private 80 40 29.766
SW1/4SW1/4ss.14, T10N, R12E landowner
Lease B private 480 33.8 25.2
SW1/4SW1/4ss.28, SE1/4,ss.29, landowner
NW1/4NE1/4ss.32, E1/2NE1/4ss.32,
NW1/4ss.33, all in T11N, R11E
Okfuskee county
Lease C private 520 270.5 201.3
SE1/4NE1/4ss.11, landowner
N1/2and N1/2S1/2ss.12,
all in T3N, R8E
Coal county
28
<PAGE>
Lease D private 440 320 238.1
NE1/4SW1/4 and W1/2SW1/2 ss.5,
NE1/4SE1/4 and S1/2SE1/4 ss.6,
NE1/4ss.7, and NW1/4NW1/4 ss.8,
all in T3N, R9E
Coal county
NE1/4ss.19, T10N, R13Ess.19, T10N, R13E
</TABLE>
------------------
(1) A "gross acre" is an acre in which a working interest is owned. The number
of gross acres is the total number of acres in which a working interest is
owned.
(2) A "net acre" is deemed to exist when the sum of fractional ownership working
interests in gross acres equals one. The number of net acres is the sum of
the fractional working interests owned in gross acres expressed as whole
numbers and fractions thereof.
(3) This reflects Bumgarner's interest in the Joint Venture (74.415%) times the
net acres owned by the Joint Venture. Bumgarner's interest in this property
is through the Joint Venture; Bumgarner has no direct interest in this
property.
The general geology for this region shows many structural features. There
is a long north-south horst-block about one mile to the west of the south
Henryetta prospect. There are faults on either side of this horst-block (an
uplifted geological block). In addition, data obtained from seismic studies in
the area show a 150 foot vertical fault just to the west of the prospect. This
information lends support to the existence of fracturing, and the possible or
probable existence of oil and gas within the south Henryetta prospect. The
principal formations in the area are the Gilcrease, Wapanucka, Cromwell, and
Booch formations (generally at depths of from 2,000 feet to 3,500 feet), the
Hunton and Wilcox formations (at about 4,000 feet), and the Oil Creek and
Arbuckle formations (at from 4,800 to 5,000 feet). Because there has been no
drilling on the south Henryetta prospect, Bumgarner has not definitively
established that these formations exist on the prospect or that (if they exist)
they are capable of producing oil or gas in commercial quantities.
Although there are no producing wells on the south Henryetta prospect,
there are numerous wells in the surrounding area. Many of these wells have been
drilled to depths from 2,000 feet to 7,000 feet, with some being deeper than
that. These wells have reported production of significant amounts of oil and
gas.
Properties - Undeveloped Acreage - Lease Obligations. As noted, the Joint
Venture has interests in four oil and gas leases. The following table provides
certain information regarding these leases.
Landowner's Royalty/Other Royalty
Lease Primary Term Interest
------------------------ ------------------- -----------------------------------
A Oct. 2003 20%
B June 2002 20%
C Aug. 2002 20%
D Aug. 2002 20%
The leases are each "fully-paid" leases that require no additional annual
rental payment or other payment before the expiration of their respective terms.
Each of the leases will continue beyond their primary term as long as oil or gas
is being produced from the lease in paying quantities. In each case, the wells
contemplated by the Joint Venture are expected to meet this requirement,
providing that they can be
29
<PAGE>
successfully completed (although Bumgarner can offer no assurance that any of
the wells will produce oil or gas in paying quantities even if completed).
Properties - Proposed Drilling Activity. The Henryetta Joint Venture has
not participated in the drilling of any wells seeking oil or gas.
When adequately financed, the Henryetta Joint Venture expects to drill
four wells. One well will be drilled on each of its leases. Three of those wells
are classified as exploratory or "wildcat" wells; one well (classified as
"proved, undeveloped") offsets a producing well owned by other people.
As noted above, the Joint Venture does not own the entire working interest
within the areas of the four leases. Unless the Joint Venture owns or controls
the entire working interest, it is not able to drill any wells. Oklahoma has a
procedure called "forced pooling" by which an oil and gas operator, such as
Inter-Oil & Gas Group, can apply to the Oklahoma Corporation Commission to force
other landowners to pool their mineral interests with the interests of that
operator. If the Joint Venture is not able to lease the remaining working
interests on terms it believes to be reasonable, Inter-Oil & Gas Group intends
to apply to force pool the remaining working interests on terms similar to the
leases which it has obtained from the other property owners, including a royalty
interest no greater than 20%. Typically this process takes about 30 days from
the application to the Corporation Commission to the final determination.
The remaining 50% working interest in Lease A described in the table,
above, is held by a unit of the Cherokee Nation. Because the Cherokee Nation is
still under the protectorate of the United States, Inter-Oil & Gas Group will
have to negotiate with not only representatives of the Cherokee Nation, but also
the Bureau of Indian Affairs of the United States Department of the Interior to
obtain a lease on the remaining 50% working interest. Working interests owned by
the Cherokee Nation or other Indian groups are not subject to forced pooling.
Although Inter-Oil & Gas Group has advised Bumgarner that it has had success in
obtaining leases from the Cherokee and other Indian nations in Oklahoma in the
past, this is more difficult than in the case of private landowners, and there
can be no assurance of success.
As a result of its ability to "force pool" private landowners and its past
success in obtaining Indian leases, however, Inter-Oil & Gas Group has advised
Bumgarner that it reasonably expects to have or control 100% of the working
interest and no less than 80% net revenue interest in each of the four lease
prospects before commencing drilling operations within that prospect.
After the remaining working interests have been obtained, Inter-Oil & Gas
Group has advised Bumgarner that the wells are expected to cost the Joint
Venture a total of approximately $2,200,000 (93% of which will be allocated to
Bumgarner). This includes the initial drilling of the well to the point (the
"casing point") where the well is tested for the presence of oil or gas in
commercial quantities and the manager will make a decision whether to install
casing and production equipment ("completion"), or to plug and abandon the well.
Generally the well will be completed where testing indicates that oil and gas is
present in commercial quantities, and production in "paying quantities" is
likely (although not assured). The manager will bear no cost of drilling to the
casing point or completion of the wells, and if the wells are completed but are
not able to produce oil or gas in paying quantities, the manager will have no
risk. Bumgarner and the other three members of the Joint Venture will bear all
of the expense and (therefore) all of the risk of the drilling.
After the first well on each lease, Inter-Oil & Gas Group will bear its
proportional share (20%) of further expenses. This will reduce the cost and the
risk to Bumgarner and the other joint venture members. The following table sets
forth certain cost information for the first wells to be drilled on each of the
leases, and also the number of additional wells that may be drilled on the
leases. The decision
30
<PAGE>
whether to drill any additional wells on any of the leases will be made only
after the first well has been drilled and completed or abandoned, based on the
geologic data known and which is developed.
<TABLE>
<CAPTION>
Estimated Cost from Casing Additional
Well Cost Cost to Point to Cost to Plug Possible Well
Lease (Total) Casing Point Completion and Abandon Locations
---------- ----------- --------------- ------------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
A $282,500 40% 60% $10,000 -0-
B $282,500 40% 60% $10,000 4
C $747,000 40% 60% $10,000 4
D $747,000 40% 60% $10,000 3
</TABLE>
The Henryetta Joint Venture has achieved no production, and therefore has
no information regarding net production, average sales price or average
production costs.
Since there are no productive wells on the south Henryetta prospect,
Bumgarner has no information regarding gross or net productive oil and gas
wells, developed acres, or overriding royalty interests.
Bumgarner is not obligated to provide a fixed and determinable quantity of
oil and gas in the future under existing contracts and agreements.
Properties - Reserve Information - Oil and Gas Reserves. Even though the
four leases are undeveloped, Sycamore Resources LLC, Tulsa, Oklahoma, has
determined that Lease A contains "proved undeveloped reserves" because the well
to be drilled on Lease A will offset an existing producing well located on a
neighboring property. None of the other three leases contain proved reserves.
Sycamore Resources has evaluated Bumgarner's oil and gas reserves
attributable to the Joint Venture's interest in Lease A at November 1, 2000.
Reserve calculations by independent petroleum engineers involve the estimation
of future net recoverable reserves of oil and gas and the timing and amount of
future net revenues to be received therefrom. Those estimates are based on
numerous factors, many of which are variable and uncertain. Reserve estimators
are required to make numerous judgments based upon professional training,
experience and educational background. The extent and significance of the
judgments in themselves are sufficient to render reserve estimates of future
events, actual production determinations involve estimates inherently imprecise.
Since reserve revenues and operating expenses may not occur as estimated.
Accordingly, it is common for the actual production and revenues later received
to vary from earlier estimates, and such variances may be significant. Estimates
made for undeveloped properties or during the first few years of production from
a property are generally not as reliable as later estimates based on a longer
production history. Reserve estimates based upon volumetric analysis are
inherently less reliable than those based on lengthy production history. Also,
potentially productive gas wells may not generate revenue immediately due to
lack of pipeline connections and potential development wells may have to be
abandoned due to unsuccessful completion techniques. Hence, reserve estimates
can be expected to vary from year to year.
Estimated Proved Reserves/Developed and Undeveloped Reserves. For the
purposes of the following discussion, you should note that:
o Proved Undeveloped Reserves are defined by the Society of Petroleum
Engineers to be reserves from established producing zones that will
require expenditures in excess of recompletion attempts. Normally this
would include drilling wells that offset existing production, and
increased reserves due to secondary and tertiary efforts. This will
take considerable investment. Proved Undeveloped Reserves are
considered to be of higher risk
31
<PAGE>
that the Proved Developed Producing Reserves or Proved Developed
Nonproducing Reserves.
o Probable reserves are defined as reserves not directly offsetting
existing production, but production of comparable size is in the area.
The reserves assigned must be normalized to the surrounding area's
production - in other words, the mean or average for a similar
structure. Probable Reserves carry a higher risk than Proved
Undeveloped Reserves.
Since the Henryetta Joint Venture has no producing wells, it has no Proved
Developed Producing Reserves, or Proved Developed Nonproducing Reserves. To the
extent that the Joint Venture can claim any reserves attributable to its
interest, the independent engineer has identified Proved Undeveloped Reserves on
Lease A, and Probable Reserves on the remaining three leases. The requirements
of governmental authorities will not permit disclosure of reserves carrying a
lower classification than "Proved Undeveloped."
Oil and Gas Reserves Reported to Other Agencies. Neither the Joint Venture
nor Bumgarner has filed any estimates of oil or gas reserves with, or have
included such information in reports to, any federal authority or agency.
Title Examinations: Oil and Gas. As is customary in the oil and gas
industry, Bumgarner performs only a perfunctory title examination at the time of
acquisition of undeveloped properties. In acquiring the leases, Bumgarner relied
on a title report prepared by a landman who is experienced in reviewing title
records in Oklahoma. Prior to the commencement of drilling, Inter-Oil & Gas
Group has advised Bumgarner that the Joint Venture will obtain a drilling title
opinion. If this title opinion (which will be written by an attorney experienced
in Oklahoma oil and gas law) shows any significant defects to the title to the
properties, the Joint Venture will remedy those defects before proceeding with
operations.
Based on information the Joint Venture has supplied to Bumgarner, it
believes that the title to its properties is generally acceptable to a
reasonably prudent operator in the oil and gas industry when acquiring the
property. The four leases the Joint Venture owns are subject to 20% landowner
royalty interests. Based on the information Bumgarner has seen, it does not
believe that any of the leases is subject to any other overriding royalty or
other interests, or any liens. These properties may be subject to minor
encumbrances, taxes, easements and restrictions. Based on the information
supplied by Inter-Oil & Gas Group, Bumgarner does not believe that any of these
burdens materially detract from the value of the properties or will materially
interfere with the Joint Venture's ability to force pool the remaining interests
in the property or then to drill the contemplated wells on the property.
Factors that may Affect Future Operating Result. In evaluating Bumgarner's
business, readers of this report should carefully consider the following factors
in addition to the other information presented in this report that attempt to
advise interested parties of the risks and factors that may affect its
participation in the oil and gas industry. As noted elsewhere herein, the future
conduct of its oil and gas exploration activities and discussions of possible
future activities is dependent upon a number of factors, and there can be no
assurance that Bumgarner will be able to conduct its operations as contemplated
herein. These risks include, but are not limited to:
o The possibility that the described operations, reserves, or exploration
or production activities will not be completed or continued on economic
terms, if at all.
o The exploration and development of oil and gas, and mineral properties
are enterprises attendant with high risk, including the risk of
fluctuating prices for oil, natural gas and other minerals being
sought.
32
<PAGE>
o Imports of petroleum products from other countries may depress prices
for oil and gas and are subject to factors beyond its control.
o Bumgarner may not encounter adequate oil and gas resources despite
expending large sums of money and following the advise of the
professional engineers and consultants who will assist it in its
operations.
o Test results and reserve estimates may not be accurate, notwithstanding
appropriate precautions, and these inaccuracies could result in
spending significant amounts of money on dry holes.
o The possibility that the estimates on which Bumgarner is relying are
inaccurate and that unknown or unexpected future events may occur that
will tend to reduce or increase its ability to operate successfully, if
at all.
o Bumgarner's ability to participate in these projects may be dependent
on the availability of adequate financing from third parties which may
not be available on commercially-reasonable terms, if at all.
o Oil and gas exploration and production have inherent risks including
the environment, low prices for oil or gas produced, competition from
better financed companies, risk of personal injury or well explosion,
and the risk of other failures in either exploration or production.
Selected Financial Data.
<TABLE>
<CAPTION>
Bumgarner Enterprises, Inc.
(A Development Stage Enterprise)
Consolidated Balance Sheet
November 1, 2000
(Unaudited)
<S> <C>
Assets
Current assets:
Cash $ 4,537
----------
Total current assets 4,537
----------
Oil and gas properties, using successful efforts method 161,316
----------
Total assets $ 165,853
==========
Liabilities and Stockholders' Deficit
Current liabilities:
Accrued compensation 30,000
Due to related party 149,316
----------
Total current liabilities 179,316
----------
Minority interest in joint venture 16,536
Stockholders' deficit:
Common stock, $.001 par, authorized 20,000,000 shares,
issued and outstanding, 14,720,000 shares 14,720
Preferred stock, $.01 par, authorized 10,000,000 shares
Deficit accumulated during the development stage (44,719)
----------
Total stockholders' deficit (29,999)
----------
Total liabilities and stockholders' deficit $ 165,853
==========
</TABLE>
33
<PAGE>
Bumgarner Enterprises, Inc.
(A Development Stage Enterprise)
Consolidated Statement of Operations
For the period from January 1, 2000 through November 1, 2000
(Unaudited)
----------
Revenues $ -
----------
Operating expense:
Rent -
Stock based compensation 14,719
Salaries and wages 30,000
Professional fees -
Management fees -
Lease costs -
Interest (income) expense, related party (0)
----------
Other -
==========
Total operating expense 44,719
----------
----------
Income tax expense -
----------
Net loss $(44,719)
==========
Bumgarner Enterprises, Inc.
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Equity
For the period from January 1, 2000 through November 1, 2000
(Unaudited)
<TABLE>
<CAPTION>
Deficit Accumulated
Common Stock During Development
------------------------ -------------------------------
Shares Amount Stage Total
---------- ------------ ------------------- -----------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 2000 1,000 $ 1 $ - $ 1
Issuance of stock for services 14,719,000 14,719 14,719
Net loss - (44,719) (44,719)
---------- ------------ -------- --------- -----------
---------- ------------ -------- --------- -----------
Balances, November 1, 2000 14,720,000 $ 14,720 $ (44,719) $(29,999
========== ============ ======== ========= ===========
</TABLE>
34
<PAGE>
Bumgarner Enterprises, Inc.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
For the period from January 1, 2000 through November 1, 2000
(Unaudited)
Cash flows from operating activities:
Net loss $ (44,719)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock-based compensation 14,719
Change in operating assets and liabilities:
Accrued compensation 30,000
-----------
Net cash provided by operating activities 0
-----------
Cash flows from investing activities:
Cash acquired in business combination 4,536
Net cash provided by investing activities 4,536
Net increase in cash 4,536
Cash, beginning of period 1
-----------
Cash, end of period $ 4,537
==========
1. Summary of significant accounting policies and basis of presentation:
Nature of business:
Bumgarner was incorporated under the laws of the State of Florida in March
1998. There has been no significant business activity since inception and no
activity whatsoever prior to January 1, 2000. Bumgarner intends to operate
in the oil and gas industry, acquiring interests in non-producing or
producing oil and gas properties and participating in drilling operations.
In October 2000, Bumgarner acquired a 74.415% working interest in the Joint
Venture - Henryetta ("Henryetta") which was formed as a general partnership
under Oklahoma law and owns four leasehold interests in Okfuskee and Coal
counties, Oklahoma (See Note 2). The properties at present have no producing
oil or gas wells, although initial plans are to drill and develop four wells
at a total cost of approximately $2,200,000. The Joint Venture automatically
terminates, unless renewed, in 2010.
Management's plans regarding operations:
Bumgarner is currently negotiating the Merger to finance the investment in
Joint Venture - Henryetta and will be further dependent on additional
financing to fund further oil and gas acquisitions or drilling activities.
Even if the Merger takes place as anticipated, Bumgarner may be unable to
finance oil and gas acquisitions through internal resources. In that regard,
Bumgarner plans to identify undeveloped or developed prospects or production
to acquire and seek other industry investors or other interested parties who
may be willing to participate in these activities. Bumgarner would retain a
promotional interest in any prospects, but may have to finance a portion of
acquisition and drilling costs.
Principles of consolidation:
The consolidated financial statements set forth above include the accounts
of Bumgarner and its 74.415% joint venture interest in Henryetta. All
intercompany accounts and transactions have been eliminated in
consolidation.
Oil and gas properties:
Bumgarner uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells that find proved reserves
and to drill and equip development wells are capitalized. Costs to drill
exploratory wells that do not find proved reserves, geological and
geophysical costs, and costs of carrying and retaining unproved properties
will be expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized at
the time of impairment by providing an impairment allowance. Other unproved
properties will be
35
<PAGE>
amortized based on Bumgarner's experience of successful drilling and average
holding period. Capitalized costs of producing oil and gas properties, after
considering estimated dismantlement and abandonment costs and estimated
salvage values, will be depreciated and depleted by the unit of production
method. Support equipment and other property and equipment will be
depreciated over their estimated useful lives.
The carrying values of the oil and gas properties as reflected in the
balance sheet set forth above do not reflect the underlying fair values of
such properties.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
2. Business combination:
As indicated in Note 1, Bumgarner acquired a 74.415% interest in Joint
Venture - Henryetta in October 2000. Consideration for this equity interest
was in the form of a $2,073,728 promissory note payable to Henryetta, which
bears interest at 6% and is payable in full by October 10, 2001 (with certain
incremental payments to be made before maturity). Bumgarner will forfeit its
interest in Henryetta (pro-rata with any unpaid balance) if the note is not
paid by the due date. (Since the note is payable to an entity included in the
consolidated financial statements, the note payable and related interest has
been eliminated in consolidation.) Results of operations of Henryetta, which
are nominal, have been included in the consolidated financial statements set
forth above from the October 2000 date of acquisition through November 1,
2000.
3. Oil and gas properties:
Bumgarner, through its Joint Venture - Henryetta subsidiary, holds an
interest in four leases of oil and gas drilling and mineral rights in Coal
and Okfuskee counties, Oklahoma. All of the acreage subject to these leases
is undeveloped.
The leases are each "fully-paid" leases that require no additional annual
rental payments or other payments before expiration of their primary lease
terms. Each of the leases will continue beyond their primary terms as long as
oil or gas is being produced from the lease in paying quantities. In each
case, the wells contemplated are expected to meet this requirement, provided
that they can be successfully completed; however, there can be no assurance
that any of the wells will produce oil or gas in paying quantities, even if
completed.
The following is a summary of the acreage subject to each lease as well as
certain other information:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Acres Primary
Lease Nature of Reserves Total Acres subject to lease lease term Lessor Royalty
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A Proved undeveloped 80 40 October 2003 20%
-------------------------------------------------------------------------------------------------
B Unproved 480 33 June 2002 20%
-------------------------------------------------------------------------------------------------
C Unproved 520 270 August 2002 20%
-------------------------------------------------------------------------------------------------
D Unproved 440 320 August 2002 20%
-------------------------------------------------------------------------------------------------
</TABLE>
4. Related party transactions:
Bumgarner has agreed to pay one of the partners in the Joint Venture-
Henryetta (Inter-Oil & Gas, Inc.) a fee aggregating $149,316 in connection
with Bumgarner's investment in Henryetta. This amount is recorded as a
liability in the accompanying consolidated balance sheet. That partner also
manages the joint venture and is reimbursed for any costs it incurs in that
regard. Finally, in addition to the aforementioned fees, that same partner
will earn $25,000 as an operating fee in connection with the two initial
wells to be drilled in Coal County and $12,000 for the wells to be drilled in
Okfuskee County.
5. Partnership Agreement:
Under the terms of the Joint Venture - Henryetta agreement, and subject to
satisfaction of the promissory note, Bumgarner is responsible for
approximately 93% of expenses and is entitled to 93% of all distributions
until such time as its investment has been recovered. The other members will
share collectively share in the remaining 7%. Thereafter profits, losses and
distributions shall be allocated 74.415% to Bumgarner, 20% to Inter-Oil and
Gas, Inc. and 5.585% to others.
6. Income taxes:
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<PAGE>
Income taxes consist of the following:
----------------------------------------------------------------
Deferred tax benefit of operating loss carry forward $18,000
----------------------------------------------------------------
Increase in valuation allowance (18,000)
----------------------------------------------------------------
Income tax expense $ -
========
----------------------------------------------------------------
Income tax expense differs from that which would result from applying
statutory tax rates to pre-tax loss due to the increase in the valuation
allowance.
Deferred tax assets consist of the deferred tax benefit from the operating
loss carryforward of $18,000, reduced by a $18,000 valuation allowance since
management cannot presently determine that it is more likely than not that
such deferred tax assets will be realized.
Office Facilities. Bumgarner's principal office is located in St.
Petersburg, Florida in the home of Charles G. Masters, its president. Bumgarner
occupies space provided by Mr. Masters at no cost to Bumgarner. After the
transaction with Ranger has been completed, Bumgarner expects to obtain a lease
of office space in the St. Petersburg, Florida region on terms that are
customary in the area. It has not yet identified any leased space to obtain, but
Bumgarner believes that there is a significant amount of availability and it
expects to be able to find the necessary space on commercially reasonable terms.
Legal Proceedings. Neither Bumgarner nor the Joint Venture is subject to
any pending or, to Bumgarner's knowledge, threatened, legal proceedings. The
Joint Venture anticipates initiating some legal proceedings before the Oklahoma
Corporation Commission and possibly Judicial action in connection with the Joint
Venture's anticipated application for forced pooling.
Identification of Directors and Executive Officers.
--------------------------------------------------------------------------
Name Age Position Address and Telephone Number
--------------------------------------------------------------------------
Charles G. Masters 60 President 3400 82nd Way North
and Director St. Petersburg, FL 33710
727-381-4904
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Teresa B. Crowley 44 Corporate c/o Peerless Consultants, Inc.
Secretary 321 N. Kentucky Ave., Suite I
Lakeland, FL 33801
863-683-5523
--------------------------------------------------------------------------
Each director holds office until the next annual meeting of shareholders
and until his successor is elected and qualified or until his earlier death,
resignation, or removal. Each officer serves at the discretion of the Board of
Directors.
Mr. Masters has served as Bumgarner's founder, President and sole director
since March 1998. Since 1973, Mr. Masters has also served as the president of
DataCash Systems, Inc., a privately owned consulting company specializing in
business and corporate development and since 1974, Mr. Masters has served as
president of MicroBeam Corporation, a privately owned computer software and
consulting company. The principal place of business for each of these companies
is located at 3400 82nd Way North, St. Petersburg, FL 33710. Mr. Masters
received a B.S.E.E. (`61) from Duke University, a M.S.E.E. (`64) from the
University of Pittsburgh and a M.S.M.S.(`66) from the Johns Hopkins University.
Mr. Masters is a citizen of the United States of America and has been a resident
of St. Petersburg, Florida for 34 years.
Ms. Crowley has served as Bumgarner's Corporate Secretary since March
1998. Ms. Crowley is also the co-founder of Peerless Consultants, Inc., a
privately owned corporation specializing in financial
37
<PAGE>
and public company consulting and has served as its Vice President and a
director since 1994. The principal place of business of Peerless Consultants,
Inc. is located at 321 N. Kentucky Ave., Suite 1, Lakeland, FL 33801. Ms.
Crowley is a citizen of the United States of America.
Neither Mr. Masters nor Ms. Crowley has been convicted in a criminal
proceeding during the past five years. Neither Mr. Masters nor Ms. Crowley was a
party to any judicial or administrative proceeding during the past five years
that resulted in a judgment, decree or final order regarding federal and state
securities laws violations.
Security Ownership of Certain Beneficial Owners and Management. The
following table sets forth certain information regarding the ownership of the
Company's Common Stock as of November 30, 2000, by: (i) each of the executive
officers; (ii) all executive officers and directors of the Company as a group;
and (iii) all those known by the Company to be beneficial owners of more than
five percent of its Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership
Beneficial Owner Number of Shares (1) Percent of Total
----------------------------------------- ----------------------- ------------------
<S> <C> <C>
Charles G. Masters (2) 11,401,000 77.452%
Teresa B. Crowley 10,000 00.067%
All executive officers and directors as a 11,411,000 77.520%
group (2 persons). The address for each
of the above directors and executive
officers is the same as listed in the
section entitled "Identification of
Directors and Executive Officers"
George Ruppel 1,000,000 06.793%
</TABLE>
-------------------------
(1) This table is based upon information contained in the books and records of
the Company. Unless otherwise indicated in the footnotes to this table and
subject to community property laws where applicable, the Company believes
that each of the shareholders named in this table has sole voting and
investment power with respect to the shares indicated as beneficially
owned. Applicable percentages are based on 14,720,000 shares of Common
Stock outstanding on November 30, 2000.
(2) Includes 400,000 shares of common stock held in the name of the Charles G.
Masters Trust Fund for which Charles G. Masters served as Trustee.
10. THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS
The Merger Agreement. The following is a summary of certain provisions of
the Merger Agreement. The summary is qualified in its entirety by reference to
the Merger Agreement, which is incorporated herein by reference and a copy of
which has been filed with the SEC as an exhibit to Bumgarner's Schedule TO. The
Tender Offer is conditioned upon, among other things, the simultaneous
completion of the Merger pursuant to the Merger Agreement. The Merger Agreement
contains customary representations and warranties with respect to formation,
capitalization, authority and other matters; contains terms of confidentiality
and indemnification and terms providing for the termination of the agreement;
and contains certain conditions subject to the satisfaction or waiver of which
depend on each parties' merger obligations, including, among other conditions,
the following conditions: (i) no temporary restraining order, preliminary or
permanent injunction or other order or decree which prevents the completion of
the Merger shall have been issued and remain in effect, and no statute, rule or
regulation shall have been enacted by any governmental body which prevents the
completion of the Merger; (ii) no proceeding shall be instituted by any
governmental body which seeks to prevent completion of the Merger or seeking
material damages in connection with the transactions contemplated by the Merger
Agreement which continues to be outstanding; (iii) approval from the
shareholders of Bumgarner with respect to the Merger shall have been obtained;
(iv) The Tender Offer shall have been completed, or will be completed at
effective time of the Merger; and (v) Bumgarner shall have received a
38
<PAGE>
written opinion from its tax counsel in the form and substance reasonably
satisfactory to it, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such opinion
shall not have been withdrawn. Each shareholder is urged to review the copy of
the Merger Agreement.
Pursuant to the Merger Agreement, Bumgarner will merge with and into BEI
Acquisition Corporation, a wholly owned corporation of Ranger, and Bumgarner
will be the surviving corporation. Ranger will issue 14,720,000 shares of Ranger
common stock in exchange for all of the outstanding shares of capital stock of
Bumgarner. Holders of Bumgarner common stock will receive one share of Ranger
common stock for each share of Bumgarner common stock. As a result of the
Merger, Bumgarner will become a wholly owned subsidiary of Ranger and, upon
consummation of the Tender Offer, Bumgarner will also hold Ranger common stock.
Appraisal Rights. Holders of Ranger common stock do not have appraisal
rights in connection with the Tender Offer. Ranger holds all of the outstanding
common stock of BEI Acquisition Corporation and, therefore, the Ranger
shareholders are not entitled to vote on the Merger and do not have any
appraisal rights with respect to the Merger.
11. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Bumgarner to consummate the Tender
Offer assuming all shares are tendered is approximately $9.4 million, which
includes estimated fees and expenses of the Tender Offer and the payments to be
made under the Handel and Perlmutter Purchase Agreements. Bumgarner expects to
use loans from a bank group to fund the Tender Offer.
Although Bumgarner does not have financing in place yet to pay for the
shares tendered in the Tender Offer, Bumgarner is currently seeking to obtain a
loan which will provide Bumgarner with the funds necessary to complete the
Tender Offer.
It is expected that loan documents will be negotiated while the Tender
Offer is outstanding and signed on or before the Expiration Date.
12. CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provision of the Tender Offer, any applicable
rules and regulations of the SEC, including Rule 14e-1(c) relating to
Bumgarner's obligation to pay for or return tendered shares after termination of
the Tender Offer, Bumgarner will not be required to accept for payment or pay
for any shares tendered pursuant to the Tender Offer and may delay acceptance
for payment or may terminate the Tender Offer: (1) if the Merger is not
simultaneously consummated with the Tender Offer; or (2) if at any time after
the date of the Merger Agreement and before the Expiration Date any of the
Following events shall occur and be continuing:
o there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable
to the Tender Offer or the Merger, pursuant to an authoritative
interpretation by or on behalf of a Governmental Entity that (i)
prohibits the acquisition by Bumgarner of any shares under the Tender
Offer, or restrains or prohibits the making or consummation of the
Tender Offer or the Merger, (ii) prohibits or materially limits the
ownership or operation by Ranger, Bumgarner or any of their respective
subsidiaries of a material portion of the business or assets of Ranger,
Bumgarner or any of their respective subsidiaries or compels Ranger,
Bumgarner or any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of Ranger,
Bumgarner or
39
<PAGE>
any of their respective subsidiaries, in each case as a result of the
Tender Offer or the Merger or (iii) imposes material limitations on the
ability of Bumgarner to acquire or hold, or exercise full rights of
ownership of, any shares to be accepted for payment pursuant to the
Tender Offer including, without limitation, the right to vote such
shares on all matters properly presented to the shareholders of Ranger,
or (iv) prohibits Bumgarner or any of its subsidiaries from effectively
controlling in any material respect any material portion of the
business or operations of Ranger, Bumgarner or any of their respective
subsidiaries, taken as a whole; or
o Bumgarner is not able to obtain financing to complete the Tender Offer.
The foregoing conditions are for the sole benefit of Bumgarner and,
subject to anything to the contrary in the Merger Agreement, may be waived by
Bumgarner, in whole or in part at any time and from time to time, in the sole
discretion of Bumgarner.
13. CERTAIN LEGAL MATTERS
General. Except as described in this Offer to Purchase, based on
Bumgarner's review of publicly available filings by Ranger with the SEC and
other information regarding Ranger, Bumgarner is not aware of any licenses or
regulatory permits that appears to be material to the business of Ranger that
might be adversely affected by Bumgarner's acquisition of shares as contemplated
herein or of any approval or other action by a domestic or foreign governmental,
administrative or regulatory agency or authority that would be required for the
acquisition and ownership of the shares by Bumgarner as contemplated herein.
Should any such approval or other action be required, Bumgarner presently
contemplates that such approval or other action will be sought, except as
described below under State Anti-Takeover Statutes. While, except as otherwise
described in this Offer to Purchase, Bumgarner does not presently intend to
delay the acceptance for payment of, or payment for, shares tendered pursuant to
the Tender Offer, pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might not result in consequences adverse to
Ranger's business or that certain parts of Ranger's business might not have to
be disposed of, or other substantial conditions complied with, in the event that
such approvals were not obtained or such other actions were not taken in order
to obtain any such approval or other action. If certain types of adverse action
are taken with respect to the matters discussed below, Bumgarner could decline
to accept for payment, or pay for, any shares tendered. See The Tender Offer -
Conditions to the Tender Offer, above, for certain conditions to the Tender
Offer, including conditions with respect to governmental actions.
State Anti-Takeover Statutes. A number of states have adopted laws and
regulations that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United
States (the "Supreme Court") invalidated on constitutional grounds the Illinois
Business Takeover statute, which, as a matter of state securities law, made
certain corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining shareholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of shareholders in the state and were incorporated there.
40
<PAGE>
The State of Connecticut has enacted a business combination statute
requiring certain board and shareholder approvals when a corporation consummates
a merger with a person holding ten per cent or more of the voting power of the
outstanding shares of voting stock of a corporation. Because Bumgarner will not
own any of the shares of Ranger until the Merger is consummated, this
Connecticut business combination statute does not apply to Bumgarner or to the
Tender Offer and it is not described in this Offer to Purchase.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
as amended, and the rules that have been promulgated thereunder by the Federal
Trade Commission (the "FTC"), certain transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the FTC and certain waiting
period requirements have been satisfied. However, the acquisition of the shares
by Bumgarner pursuant to the Tender Offer is not subject to these requirements
because the ultimate parent entity of Bumgarner does not have either (i) total
assets of $100,000,000 or more, as stated on the last regularly prepared balance
sheet of that person, or (ii) annual net sales of $100,000,000 or more, as
stated on the last regularly prepared annual statement of income and expense of
that person, as those terms are defined in the Federal Trade Commission's
implementing regulations under the Hart-Scott-Rodino Antitrust Improvement Act
of 1976, as amended.
The FTC and the Antitrust Division frequently scrutinize the legality
under the Antitrust Laws (as defined herein) of transactions such as the
proposed acquisition of shares by Bumgarner pursuant to the Tender Offer. At any
time before or after Bumgarner's acquisition of shares, the FTC or the Antitrust
Division could take such action under the Antitrust Laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the acquisition
of shares pursuant to the Tender Offer or otherwise seeking divestiture of
shares acquired by Bumgarner. Private parties, as well as state governments, may
also bring legal action under the Antitrust Laws under certain circumstances.
Based upon an examination of information available to Bumgarner relating to the
businesses in which Bumgarner and Ranger are engaged, Bumgarner believes that
the acquisition of shares by Bumgarner will not violate the Antitrust Laws.
Nevertheless, there can be no assurance that a challenge to the Tender Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended, the Federal Trade Commission Act,
as amended, and all other Federal and state statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
14. FEES AND EXPENSES
Bumgarner has retained Beacon Hill Partners, Inc. as Information Agent in
connection with the Tender Offer. The Information Agent may contact holders of
shares of Ranger common stock by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee shareholders to
forward material relating to the Tender Offer to beneficial owners of Ranger
common stock. Ranger will, on behalf of Bumgarner, pay the Information Agent
reasonable and customary compensation for these services in addition to
reimbursing the Information Agent for its reasonable out-of-pocket expenses.
Bumgarner has agreed to indemnify the Information Agent against certain
liabilities and expenses in connection with the Tender Offer, including certain
liabilities under the Federal securities laws.
41
<PAGE>
In addition, Bumgarner has retained Continental Stock Transfer & Trust
Company as the Depositary. Ranger will, on behalf of Bumgarner, pay the
Depositary reasonable and customary compensation for its services in connection
with the Tender Offer, will reimburse the Depositary for its reasonable
out-of-pocket expenses and Bumgarner will indemnify the Depositary against
certain liabilities and expenses, including certain liabilities under the
Federal securities laws.
Bumgarner has paid or will be responsible for the following expenses
incurred or estimated to be incurred in connection with the Tender Offer and the
Merger:
Description Amount
----------- ------
Legal fees and expenses.............. $20,000
Miscellaneous expenses............... 20,000
TOTAL................................ $40,000
Ranger has paid or will be responsible for paying certain out-of-pocket
expenses and the following expenses incurred or estimated to be incurred in
connection with the Tender Offer and the Merger:
Description Amount
----------- ------
Legal fees and expenses................................. $175,000
Depositary fees and expenses............................ 7,000
Information Agent fees and expenses..................... 10,000
SEC filing fee.......................................... 1,700
Printing costs (including, newspaper adversisement)..... 12,200
TOTAL................................................... $205,900
The fees and expenses incurred or estimated to be incurred by Bumgarner
and Ranger in connection with the Tender and the Merger do not include the fees
and expenses Bumgarner expects to incur in connection with the financing which
Bumgarner is currently seeking to pay for the shares tendered in the Tender
Offer. See The Tender Offer - Source and Amount of Funds, above. Bumgarner is
not currently able to estimate the fees and expenses that may be associated with
obtaining the necessary financing.
Except as set forth herein (other than, in the event that the laws of one
or more jurisdictions require the Tender Offer to be made by a licensed broker
or dealer, to a broker or dealer licensed in such jurisdiction), Bumgarner will
not pay any fees or commission to any broker, dealer, or other person for
soliciting tenders of shares pursuant to the Tender Offer.
15. MISCELLANEOUS
Bumgarner is not aware of any jurisdiction in which the making of the
Tender Offer is prohibited by any administrative or judicial action pursuant to
any valid state statute. If Bumgarner becomes aware of any valid state statute
prohibiting the making of the Tender Offer of the acceptance of Ranger shares,
Bumgarner will make a good faith effort to comply with that state statute. If,
after a good faith effort, Bumgarner cannot comply with the state statute,
Bumgarner will not make the Tender Offer to, nor will Bumgarner accept tenders
from or on behalf of, the holders of Ranger shares in that state.
Bumgarner has filed with the SEC a Schedule TO, together with exhibits,
furnishing certain additional information with respect to the Tender Offer, and
may file any amendments to the Schedule TO. The Schedule TO and exhibits or
amendments may be examined and copies may be obtained from the SEC in the same
manner as described in Consolidated Financial Statement Projections - Available
42
<PAGE>
Information, above with respect to information concerning Ranger, except that
copies will not be available at the regional offices of the SEC.
Bumgarner has not authorized any person to give any information or to make
any representation on Bumgarner's behalf that is not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, you should not
rely on any such information or representation.
Neither the delivery of this Offer to Purchase nor any purchase pursuant
to the Tender Offer will, under any circumstances, create any implication that
there has been no change in the affairs of the Bumgarner, Ranger or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this Offer to Purchase.
The matters discussed under the heading Special Factors and in Selected
Pro Forma Financial Data, above contain forward-looking statements that involve
risks and uncertainties. Shareholders are cautioned that, in addition to the
other factors set forth under the heading Special Factors, the following factors
may cause Ranger's actual financial performance to differ materially from those
expressed in such forward-looking statements: (i) competitive pricing pressures;
and (ii) changes in industry laws and regulations.
43
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for shares
and any other required documents should be sent or delivered by each shareholder
of Ranger or his broker, dealer, commercial bank, trust company or other nominee
to the Depositary, at one of the addresses set forth below:
The Depositary for the Tender Offer is:
Continental Stock Transfer & Trust Company
By Mail, Overnight Courier and Hand:
Reorganization Department
2 Broadway
New York, New York 10004
By Facsimile Transmissions
(for Eligible Institutions Only):
(212) 616-7610
Confirm by Telephone:
(212) 845-3226
Any questions or requests for assistance or additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and the Guidelines for Certification of Taxpayer Identification on Substitute
Form W-9 may be directed to the Information Agent at the address and telephone
numbers set forth below. Shareholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Tender Offer.
The Information Agent for the Tender Offer is:
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
Call Collect (212) 843-8500
Call Toll Free (800) 755-5001
